But don’t let that uptrend fool you — picking individual retail stocks is anything but easy.
When investors pile their money into a company that has to stock and sell the latest fashions, they’re in a sense betting on the whims of picky shoppers. Styles that are in one day can completely change in the blink of an eye. Just look at how Abercrombie & Fitch (ANF) fared in mid-2012, or how far off Chico’s (CHS) remains from its mid-2000s glory days.
Then there’s the expectations game to consider. Some of the best-performing retail stocks so far in 2013 are ones that remain far off their peaks but have managed at least small comebacks, while other companies that are actually “in” must clear a higher bar.
One way to protect yourself from the volatility and question marks of the retail sector is to pick stocks offering dividends. While the specialty retail sector is hardly known for giant payouts, a few companies yield a decent amount of income that can help investors weather the inevitable storms.