Has Nordstrom Put in a Bottom at $28?

Nordstrom, the standard in upscale, big-store retail, likely will post 2010 revenue growth of 4% or 5%. Nordstrom will stay focused on its most effective brands and prudently deploy capital until store traffic improves with the U.S. economic expansion.

The company's "quality everywhere" business model has survived the 2007-2009 recession, but as a mini-concession to the frugal consumer, it's opened a Nordstrom Rack operation for cost conscious shoppers; 30 Nordstrom Racks should be open by the end of FY2011.

The Thomson Reuters First Call FY2011/FY2012 EPS estimates for JWN are $2.61 to $2.99.

Technically, Nordstrom's summer plunge brought shares close to the $24 sell/stop loss, but shares found support at about $28 and the recent move above $30 is encouraging. Another slump below $30 would be bearish, however.

2010 Outlook: I view Nordstrom as a long-term play, but if investors are looking to sell JWN within the year, it's probably best to take your profits after it rises to $45 or $46, if it fails to rise above $47.

Stock Analysis: I consider Nordstrom Inc. to be a moderate-risk stock. If an investor has already purchased the company's shares, I'd hold them. If not, I'd consider buying a 25% position in JWN now, then buy another 25% in one month, if U.S. economic conditions don't worsen substantially. Under any circumstance, I wouldn't buy more than 50% of my JWN position before November 2010, and I'd put a sell/stop loss at $24.

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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.