7 Retail Stocks Cashing in This Holiday, Growing Into 2012

I get so much grief every time I recommend a retail stock or consumer company.
People have a hard time seeing the opportunity while the economy still is trying
to build a recovery but the profits don't lie. The fact is strong brand
recognition and very loyal customers continue to boost the sales at a number of
specialty retailers with great products and a targeted audience. Focusing on
auto parts, for instance, as consumers drive their older cars more is a very
logical investment. Focusing on discounters amid weak spending is also wise.
Here are seven retail and consumer stocks doing it right right now: Costco
Wholesale Inc. (NASDAQ: COST ) is basically a cult for thrifty shoppers that
like luxury goods (electronics, food, etc.) at bargain prices. With retail sales
picking up, I expect the company will sell more high-end products that will pad
its operating margins. For example, at my last visit to Costco, there were many
filet mignon roasts available at approximately $90 apiece for holiday meals, as
well as lobster tails and other expensive food items. And, Costco will get a new
CEO with Craig Jelinek taking the reins from Jim Sinegal. I don't see any
potential problems with the transition or the future prospects of COST shares.
Dollar Tree Inc. (NASDAQ: DLTR ) grew revenues and earnings steadily throughout
the recession and, despite the economic recovery, it still is reporting record
sales and earnings. The reason is that record-high food and gasoline prices have
caused consumers to retrench even from discount giant Wal-Mart (NYSE: WMT )
and they are finding values in familiar places like Dollar Tree. Going forward,
the company has radical plans to add frozen-food sections and has begun
accepting food stamps. While there is no doubt that we are experiencing an
economic recovery, Dollar Tree remains a go-to retailer for cost-conscious
shoppers, and will be in the years ahead. Limited Brands Inc. (NYSE: LTD ) is a
retail company that operates roughly 2,970 stores throughout North America under
the Victorias Secret, Bath & Body Works and La Senza (Canada only) brand names.
While some retailers have had it rough in the last few quarters, LTD is growing
same-store sales. In the most recent quarter, LTD saw same-store sales rise 6%
while big chain retailers like Gap Inc. (NYSE: GPS ) saw sales drop 4%. Market
outperformance is the name of the game for this company, and you should be
confident owning LTD in 2012. Lululemon Athletica Inc. (NASDAQ: LULU ) is my
play on yoga apparel. I know it doesn't sound like much, but when retailers
hit a nerve with shoppers, the profits can be stunning. With the rising
popularity of the Lululemon brand, fundamentals have followed. Last quarter, the
company posted a 39% increase in sales and a 74% increase in earnings. With New
Year's resolutions just around the corner, I bet we're going to see
market-trouncing numbers from the company in the quarters ahead as well.
O'Reilly Automotive Inc. (NASDAQ: ORLY ) is benefiting from the fact that the
average car is now more than 10 years old and needs lots of TLC. The company has
more than 3,400 locations throughout 38 states as well as a lucrative online
store. The company caters to both do-it-yourself customers and professional
installers. Since the beginning of 2011, the company has opened 137 new stores,
demonstrating that more consumers than ever want access to auto parts to
maintain their current cars. For fiscal year 2011, OReilly raised its outlook
for reported earnings, adjusted earnings and sales. Priceline.com (NASDAQ: PCLN
) is top dog among travel booking sites thanks to its unique business model that
allows buyers to name their own price for airline tickets, rental cars and hotel
rooms. The company is experiencing ballooning market share in Asia and Latin
America; this year, analysts expect Asia bookings to grow by 150% and Latin
American bookings to triple! Analysts predict 42% sales growth and 200% earnings
growth five times the industry average from the travel site! All in all, I
love Priceline.com's exposure to global markets. Ross Stores Inc. (NASDAQ:
ROST ) continues to benefit from value-focused customers and is succeeding in
areas like Florida that were particularly hard-hit by the financial crisis. The
company also just expanded its national footprint by opening 12 stores in the
Chicago area, solidifying its spot as the nation's largest off-price apparel
and home fashion retailer. ROST is a terrific momentum play.