"Street Critique"-Patrick O'Hare, Editor-in-chief at Briefing.com
Wednesday, September 12, 2007PAUL KANGAS: Tonight's "Street Critique" guest says, when it comes to shopping, everyone likes to get a discount. So he's brought our viewers some retail stocks that he says are on sale. He's Patrick O'Hare, editor-in-chief at the financial education web site briefing.com. Pat, welcome back to NIGHTLY BUSINESS REPORT.
PATRICK O'HARE, EDITOR-IN-CHIEF, BRIEFING.COM: Hi, Paul, thank you.
KANGAS: You write the bargain hunting column at briefing.com where you use a contrarian approach to finding bargains. Why is that?
O'HARE: It boils down to some sage advice by a fellow by the name of Warren Buffett who is good investor in his own right who tells us you're supposed to sell when others are greedy and buy when others are fearful and when others are fearful, you often have stocks that are marked well off their respective highs and support a more attractive long-term risk reward profile.
KANGAS: Fair enough. Why are you seeing value in some of the big retailers? I thought the consumer discretionary sector was on the outs.
O'HARE: You're right about that. These sectors are as on the outs as that one is, but that fits right in with the contrarian approach. We think given the degree to which a number of these retailers have sold off here, that they created some nice openings here for investors to really start accumulating some minor positions in these beaten down names.
KANGAS: Let's get right to your selections. Tell me about your first choice, keen retailer American Eagle Outfitters.
O'HARE: The symbol is AEO. American Eagle Outfitters has done really well. You don't see it reflected in the stock price though because it's been a victim of its own success. There's worries about difficult comparisons there and the market starting to discount that into the stock price. But recently the chairman bought almost 850,000 --
KANGAS: That's a chunk of stock, yes.
O'HARE: Price is right around $24 per share. There's been others insiders buying around that level, too and we think that is really a strong confirmation in the long term outlook for this stock.
KANGAS: The chart shows that certainly has come down. How about another selection?
O'HARE: Sure, Sketchers, the symbol is SKX. It's really a wholesaler of shoes but it fits into this segment because it does have a retail operation that accounts for about 20 percent of sales. The stock got clobbered after a second quarter disappointment from the company, but I point out to your viewers that that disappointment wasn't due to a weakness in demand. Demand is actually quite strong for Sketchers. It was driven more by the increased investments the company is making in its infrastructure to support the growing demand for its products. Wand wile that disappointment chased out some short term money, we think it's created a nice opening here for long-term investors.
KANGAS: And finally you like Home Depot (HD), the stock has been beaten up over the last few months, is that why you like it? I guess so.
O'HARE: We do. The company has absorbed its share of bad news here. Everyone is well aware that the housing market is not in good shape right now. It's going to take some patience with this name, but it's a company that is in very good financial shape. It's recently bought back 14 percent of its outstanding shares. It's got plenty of cash to buy back more stock and it's going to end up supporting a very nice dividend here for the patient-minded investor over the near term.
KANGAS: Very good. Pat, do you own any of these stocks or have any other disclosure to make about them?
O'HARE: No, I do not, Paul.
KANGAS: I want to thank you for being with us again. Some interesting viewpoints, we appreciate it.
O'HARE: Thank you.
KANGAS: My guest, Patrick O'Hare of brief.com.
