But is that enough to fend off disappointing sales, if the U.S. economy continues to slow? The bears say no, arguing that even middle and upper-middle income shoppers will cut-back if the economy continues to slow. And it's that sentiment that helps explain Nordstrom's low p/e of 12, and a stock price that has fallen from the $59 level in February 2007 to the current $34-$35 range. The Reuters 2008/2009 EPS consensus estimates for JWN are $2.78/$3.12.

Perhaps 20% of the risk associated with owning Nordstrom concerns further deterioration in the U.S. economy, since if the U.S. economy falls into a recession Nordstrom's revenue and earnings will suffer. The other 80% of the risk concerns Nordstrom's stock, currently selling for a low price, remaining at a low price in the quarters ahead. But if the economy performs reasonably well in 2008, JWN's sales should remain adequate and its stock price should improve from its current hardly-outlandish p/e level.

Given the most likely scenario for the U.S. economy and, by extension, for consumer spending, that tips the scale in favor of buying Nordstrom at these levels. This analysis argues that a bottom is in place near $32 and that the stock will hold $30, moving forward.

The First Call mean rating for JWN is Hold (19 firms), and the mean 2007 target is $47.10 (high: $64, low: $32).

Stock Analysis: Nordstrom is a moderate-risk stock not suitable for low-risk investors. Don't buy Nordstrom if your portfolio already contains a sufficient retail stock component. Investors with an investment horizon longer than two years should be rewarded from JWN's shares. Consider a stop loss of $24.