Wednesday's trading session was a busy day for investors with exposure to the retail space, as Target Corporation (NYSE: TGT) and Lowe's Companies, Inc. (NYSE: LOW) each reported strong second-quarter results.
Target and Lowe's share three similar tailwinds that contributed to strong second-quarter results, UBS retail analyst Michael Lasser said during a Wednesday CNBC interview.
First, both retailers took advantage of a strong consumer who is indeed spending money, the analyst said.
Second, both Target and Lowe's fit within the "strong, large and well-positioned" retail segment, as opposed to others that are grouped in the "everyone else" category, he said.
Target and Lowe's benefit from exceptional management teams that "deserve a lot of credit" for recent initiatives, Lasser said.
All About The Consumer
The consumer remains consistently "healthy" based on a proprietary survey of 600 people, Stifel lead retail analyst Mark Astrachan also told CNBC.
The monthly survey includes spending intentions on a go-forward basis, and it is clear the "consumer wants to spend," the analyst said.
Related Link: 'Unheard Of': The Early Reaction To Target's Big Quarter
Recession Fears Overblown
O'Shares ETFs Chairman and "Shark Tank" personality Kevin O'Leary laid out a clear case on CNBC's "Squawk Box" as to why he believes there won't be a recession in the U.S.
The combined cash flow of a portfolio of 52 domestic small-cap stocks that O'Leary examined is higher on a month-over-month basis, he said.
"We are having the best quarter in history yet again."
All Losers Aren't Going To Zero
The retail environment is delineated by winners who are growing above industry average and are "sucking a lot of oxygen" out of the rest, former Walmart Inc (NYSE: WMT) CEO Bill Simon said separately on "Squawk Box."
Companies without the level of scale Target is showing — especially those mostly exposed to shopping malls — continue to find it difficult to compete, he said.
Other retailers still offer investors some value, especially those that focus on smaller-size stores like dollar stores, Simon said.
Among the smaller subset, there will be some winners who leverage a strong brand and find some success, and others will fail, he said.
"Find the ones that have a strategy for growth and you can invest there," the former Walmart CEO said. "Being stuck in the middle without something to be famous for — none of that works."
Tariffs are an "overblown" concern, Simon said. The fact that Target raised its outlook signals that the retailer "isn't worried," he said.
If anyone should be concerned, it should be China, as American companies have been on notice for a year, and many worked on shifting production elsewhere, he said.
"I think it can have a long and permanent affect on China," he said. "Because once those supply chains move, it's a generation before they come back. So I think American retailers and consumers will figure out how to navigate around whatever tariffs actually get implemented. I think it's China that is going to suffer."
Related Link: Momentum And Discipline: The Street Weighs In On Walmart
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