Lululemon (NASDAQ:LULU), American Eagle (NYSE:AEO) and Abercrombie & Fitch (NYSE:ANF) are Three Top Stock Picks from Jen Redding

August 11, 2020

Jen Redding is an Equity Analyst at Wedbush Securities Inc. covering consumer sector stocks, with experience covering consumer and tech stocks spanning 10-plus years, including coverage of companies in softlines, broadlines, e-commerce, leisure and restaurants.

Ms. Redding spent the most recent two-year period as Director of Consumer and Tech Data Research at an off-Street startup, where she spearheaded correlating and packaging raw data into actionable product for institutional investors. At BMO Capital Markets, LLC, Ms. Redding envisioned and led the BMO Big Data initiative.

In this 1,650 word interview, exclusively to the Wall Street Transcript, Ms. Redding picks her current retail sector favorites after the COVID 19 disruption.

“We have “outperform” ratings on American Eagle (NYSE:AEO) and Abercrombie & Fitch (NYSE:ANF). We see a strong response as stores reopen, at a time when teens are eager to venture outside of home, into malls in specialty retail.

We think both American Eagle and Abercrombie & Fitch have the right product and are best positioned to take advantage of fallout from COVID. In a worst-case scenario, we think both names show relative outperformance in the back half, because of proven lessons learned internally over the course of the recent shutdown, and improvement in potential future pandemic-environment execution.”

These two picks are not the only stocks Ms. Redding likes in the sector:

“We think the Mirror acquisition is a great opportunity for Lululemon (NASDAQ:LULU). In our opinion, the company made a smart bet on the future of fitness in an environment that really tips odds in Lululemon’s favor.

Lululemon potentially establishes Mirror into homes faster, and it’s also a great opportunity for Lululemon to become even deeper embedded into the community. Bottom line: We see potentially strong synergies between Lululemon and Mirror, likely making the deal more accretive to earnings sooner than expected.”

Companies without strong e-commerce capabilities are in trouble:

“We’re generally cautious on off-price retail as a whole into the back half, owing to low visibility into the potential store closures in the back half, coupled with the lack of e-commerce business in the off-price industry.

If stores face a forced shutdown and/or consumers change course and stop trafficking physical locations, off-price doesn’t have a fallback plan, given the channel doesn’t play in e-commerce. Valuations are relatively rich in the off-price space, and we see this coupled with lower visibility on the off-price channel’s ability to compete, assuming a second round of forced closures as a real wild card for the industry.”

Get all the top picks and details behind them by reading the entire 1,650 word interview, only in the Wall Street Transcript.