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Retail Stocks that Can Boost Your Bottom Line

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  • Description

    Macquarie Capital analyst Liz Dunn gives her picks for the retail industry.

  • Duration 2:56
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Thank you so much thanks enact a as a government attack could start goldilocks and the three bears -- storyline things he playing out with departments -- earnings this week.

Client Nordstrom's discounter -- middle of the road Macy's south which stock is just right for your hopeful they'll let that Liz -- and -- the applying capital -- -- -- cover a whole bunch of these names on a -- through his -- -- short period of time but let's start with Macy's.

C this is one of the safest.

That's why.

-- think it's as strong sales trends they've had a strong sales trend going here and and actually for quite awhile now for a few years but beyond that they have the most stable gross margin of any company that I cover.

-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- They also have the best free cash flow yield any company I cover and so they're using that cash to buy back stock.

We know consumption is down that was the big drag on GDP second quarter first trip -- couple weeks or last week.

Three consecutive month of declining retail sales the big picture here is not promising for any of these companies.

But Macy's is it guarded against these he's broader trends in your view.

Well it's not not completely -- no company is but I do think that there poised to take share to continue taking share.

And they also think that they can drive exceptional double digit earnings growth.

On relatively modest levels of sales growth take the second quarter friends since their contract to grow or they -- the second quarter earning our sales by 3%.

But will see significant bottom line earnings and so I think that's the best to keep with Macy's -- they don't need.

A very robust backdrop to really be able to drive earnings -- -- the middle retailers by and large really coming into their own in coming on strong now because.

-- time the luxury retailers were knocking it out of the park because that was a whole different level consumer but -- -- low when.

The struggling because of broader economic challenges.

Yeah I think the mid priced retailers are really tied to economic improvements and so.

As we do get jobs growth you know it's been fairly anemic but it has been moving in the right direction that -- growth for companies like Macy's -- -- -- is mostly about in my.

View.

Just confidence insurance and so they're different drivers there than than for the middle income.

Quickly -- -- you cover fossil huge move today is it sustainable.

Yet you know that the stock in my mind is oversold and so it was nice to see the recovery today.

I think people are scrambling to buy it -- certainly some short covering but I think there are also new buyers but we heard from them today with an acceleration across all.

All categories and -- I'm sorry all geographies which was really important.

And gross margins were better and so that's that's a really important trend now they did -- down guidance a little bit but I think the fear out there was.

Was really that they'd have to reduce guidance by a greater percentage and so.

The stock is getting a little bit of her relief rally here and I think that's kind of pointed at high point for a lot of these names.

-- -- Liz Liz does take you so much hate having your analysis appreciate it.

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