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Gilman Hill’s Harrington on why this cheap retail stock is a buy as holiday season commences


Gilman Hill Asset Management’s Jenny Harrington is betting on Foot Locker as the holiday season kicks off, saying the stock is cheap and offers more upside from here. “The theme is that the shares of these companies had been punished as if the consumer was just gonna lay down and die and never spend any money again,” she told CNBC’s “Halftime Report” on Wednesday as she named her favorite retail stock picks. “And guess what, American consumers are extremely resilient, and they continue to spend.” Shares of Foot Locker are cheap, according to Harrington, with the stock last trading at a price-to-earnings ratio of roughly 8 times. She also highlighted the company’s share buybacks — and a dividend yield of 4.3% according to FactSet — as reasons she’s betting on the stock. While down about 15% this year, Foot Locker’s stock has bounced back 17% this month, and rose about 3% Wednesday. The sportswear retailer shared earnings this month that surpassed Wall Street’s expectations and lifted its forecast for the full year. CEO Mary Dillon told CNBC’s “Squawk Box” last week that consumers are showing resilience despite a murky macro environment. To be sure, investors should proceed cautiously when choosing retail stocks in this environment, Harrington said. The sector is holding on but not faring all that well, meaning investors likely won’t get the earth-shattering upside returns they got when they purchased the stocks at earlier lows, she said. “I think the super ultra low-hanging fruit was there in the summer and you missed it,” she said. “You’re not gonna get up 40% from here and up 30% from here, but to some degree, there is still low-hanging fruit.”

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