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Baird Investment Management’s Ken Hemauer on the retail stocks investors should consider for their portfolios.
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Holiday shopping season coming to a close in the US swell as we know now on the -- that fiscal cliff.
So what could it mean for retailers in 2013 my next guest has a few suggestions for retail names that he says.
Could do well no matter what kind of economic environment -- in.
Ken -- out is bad investment management portfolio manager and he joins me now and a Fox Business exclusive from.
Milwaukee Wisconsin used to living green they -- Wisconsin I can thank you so much.
All right so tell me what do you like when it comes to the retailers and 2013 what -- picks and explain to me why.
-- I think that the the first -- artists to recognize that we're we're in an uncertain environment and it's likely to stay that way just given the news flow that we have.
In -- were trying to do is take a balanced approach first off look for really well managed business says.
And then you know can we find areas which may not -- is impacted by how strong the economy is so in other words.
Are -- areas where the consumers gonna continue to spend.
Weather now we have slow growth -- fast growth in the United States in one area that I would suggest.
Can do well on that environment would be the auto parts retailers.
In particular we like O'Reilly Automotive.
We think it's a very well managed business they continue to have the ability to grow their store base.
And when you think about that -- customer.
Truly needs a -- -- to get to work who continues to potentially put off a purchase of a new car.
I really you know is -- is impacted by how fast the economy grows so.
You know the ability to grow the store base to continue to grow sales in the individual stores each and every year.
And then on top of that they've done a really nice job managing the cost structure of the business.
And and these business models produce a lot of cash and they've been buying back stock aggressively so.
It's a nice recipe for growth even into 2013.
In an uncertain environment and can you mentioned no Reilly why why -- prefer this -- order zone that's.
You know continues to grow and is arguably -- dominance -- that that market.
Sure that great question I would say that they're both very good companies we just happen to like.
The growth growth profile at O'Reilly we think they go store base a little bit faster and have a potential to grow the top line revenue.
A bit faster but I wouldn't argue that either of them.
Are very good companies all right let's go to discount retailers -- -- -- -- general what do you like about this stock yet.
Insisting area.
Clearly they're playing into an area where the consumer stress so arguably even in a tougher.
Economic environment.
More consumers may fall into that market.
It's a bit kind of controversial now feed you look at the stock prices it out in that group they've really pulled back a bit in.
Part of that is the worry over the cliff here in in how much -- the lower end consumer is impacted by the changes so that is a risk.
But at the same time against.
Good management team the ability to grow the stores.
There is a bit more competition which is caused some of the near term risk here so this is one area where I think people should keep their eye out but when you really can't think about a slower growth environment.
Tough consumer environment people need to go here right plea for need based items and we think that business model under good management can still do good things but it's clearly a period of uncertainty in the near term sure I -- that we got about a minute left and wanna get your actual retail names that you pick out.
PVH corporation the don't know that yet Tommy Hilfiger brand and you also like -- -- drama let's begin with PBH yet -- -- PVH can be a really nice story it has been a good stack the last twelve months we think that can continue.
The company again managing two very strong brands and Tommy Hilfiger and Kevin -- very well.
I just did an acquisition of Warnaco which has been out licensing partners we think -- And in essence -- clean up.
The distribution the brand and marketing strength get more exposure geographically.
Really nice deal that closes during 2000 -- thirteen so well managed coming into the year.
And with some opportunities to lift earnings -- that position.
Very -- -- drama quickly.
Beyond -- -- a little higher risk higher expectations that look what a great brand that they've developed the last five years.
But we think the runway as a long over a period of years here so whether it's thirteen 1415.
We like the growth profile very well known well managed brands people are spending money.
-- -- the sporting goods area in the apparel apparel area and we think that continues.
Very get lots of great information thank you so much can -- -- they have bad investment management portfolio manager thank you so much we appreciate it can.
Thank you had to take a look at these.
