Given the current state of the economy all would agree it's going to be a long road home. The market is up today on a few bits of news following what has been a dreadful last ten days. Maybe it's the merger and acquisition activity, maybe it's the news that Citigroup Inc. (NYSE: C) "let slip" that they earned a profit the first two months of the year. Perhaps the market was just due for a bounce before another slide?

Every day we read various rationales for why the market may be undervalued, or as some believe, still has a long way to drop. We look at stocks of strong companies with historically low price-to-earnings ratios and think now is the time to get in. However, someone will be quick to point out that forward earnings are perhaps going to be less than projected.

If there is anything that makes me think we could be close to a market bottom, it is all the people that have gone off the deep end thinking the world may be coming to an end.

For the time being highly leveraged debt obligations seem to have come to an end. Large independent investment banks may have come to an end for now. The idea of a balanced budget may have come to an end a long time ago. However, the world is not coming to an end.

If anybody out there thinks that the times we live in come close to the Dark Ages, the American Revolution, the Civil War, World Wars I or II, or the Great Depression, then they are wimps who know nothing about history or true misery.

The 2009 clock is ticking loudly. The year has started off with a lot of continued turbulence. We have a new president, Barack Obama, who will boldly lead us where no man has gone before -- two trillion further in debt, most likely.

Not that this is his doing, but it is his chosen calling, and right now he is calling out to the Senate minority to compromise, and get yet another federal stimulus package off the shelf and out the door.

Anybody have capital gains to show this year? I didn't think so. Not unless you were shorting the market, and in particular financials. I got clobbered with everyone else. There were not many places to hide. Picking winners was like guessing where each piece of debris would land after the tornado moved through town.

The average crystal ball is looking quite foggy about now, nevertheless I have rummaged throughout the stock market to select nine stocks that I think offer more reward than risk. The market is priced for the worst in so many cases that I think the list could have included 50 companies without too much trouble.

In 2007 and 2008 I owned some but not all of the picks for the year. This year I own all of the stocks and they were all acquired in the latter part of the fourth quarter for a new portfolio.

Youth-retailer Aeropostale (NYSE: ARO) had a much better third quarter than I thought it would have. I was expecting a lower earnings growth rate and a worse performance in terms of same-store sales. Diluted earnings per share actually rose over 30%, coming in at $0.63. Way to go. And this performance beat expectations by a penny, according to Reuters Estimates. Net sales increased 17%. Double-digit expansion in both the top and bottom lines really is something to crow about in this terrible mall environment.

At least as far as I'm concerned, the 5% fall in same-store sales for the month of November wasn't too bad, especially considering that comps increased 7% for Q3 as a whole. Plus, on a year-to-date basis, comps rose 7%. Management can be proud of its achievements. However, that 5% drop in comparable sales for November is, unfortunately, a sticking point in terms of buying the retailer's stock. The economy has gotten much worse since I wrote about Aeropostale back in August. This decline might be a precursor to more bad times ahead. In fact, the stock is no longer as strong as it was earlier in the year. Shares of Aeropostale are trading closer to a 52-week low as opposed to a 52-week high.

There's no question that Aeropostale, whose colleagues at the mall include Abercrombie & Fitch (NYSE: ANF), Gap (NYSE: GPS) and American Eagle Outfitters (NYSE: AEO), has been efficiently marketing to its target audience. There's also no question that now may not be the time to roll the dice on a business that caters to fickle demos. Personally, I think Aeropostale offers value at these levels. But I'd still rather wait for the macro economy to improve before getting into this retailer.

Disclosure: I don't own any company mentioned; positions can change at any time.

American Eagle Outfitters (NYSE: AEO), whose competitors at the mall include Abercrombie & Fitch (NYSE: ANF) and Gap (NYSE: GPS), is part of a sector I'm not much of a fan of currently: retail. Just saying the word aloud makes it sound repulsive these days. Don't get me wrong, retail will come back (someday). For now, though, it's difficult to look at the numbers associated with the industry, especially the same-store sales.

Looking at American Eagle, I can see that its third quarter was, as expected, not too inspiring. Adjusted earnings per share dropped 33% to $0.30. Worse, comps plunged 7%. Last year at this time, comps increased 2%.

It's tough out there, folks, and it probably will get tougher. American Eagle, like every retailer out there, is facing a perplexing problem. What's the best way to get traffic through the door? Marketing and promotions. What do retailers have to focus on this Christmas season? Containment of costs. Margins are important, and management doesn't want them to deteriorate too badly. You can see the challenge. Plus, American Eagle can't really count on its target shopper. Young people are oftentimes fickle and ready to jump to some other business near the food court. Not a great position to be in.

This post is part of a series in which TheStockAdvisors.com asked financial experts to name their top stock pick if McCain or if Obama wins the election.

"Obama's tax plan would give greater relief to the lower and middle classes; one retailer that would benefit from this is American Eagle Outfitters (NYSE: AEO)," says John Reese, editor of Validea, which follows the investment criteria of "legendary" investors such as Warren Buffett and Peter Lynch.

"Consumers have had to tighten their wallets and purses because of the slowing economy and rising food and fuel prices. Breaks for average Americans would be welcome news for retailers, which have sputtered amid the downturn.

"In the event of a retail surge, this teen-focused Pittsburgh-based clothing chain should be at the head of the line.

"American Eagle gets approval from two of my Guru Strategies -- computer models that are each based on the published approach of a different Wall Street great. What's more, the two strategies that like the firm are modeled after two of the greatest gurus, Warren Buffett and Peter Lynch.

"My conservative Buffett-inspired model looks for stocks with a lengthy history of steadily increasing earnings, as well as a conservative balance sheet.

"Eagle has grown earnings per share in eight of the past ten years, with EPS rising from $0.25 to $1.82 in that time, meeting the first criterion. In addition, the firm has no long-term debt, which my Buffett model loves.

This post is part of a series in which TheStockAdvisors.com asked financial experts to name their top stock pick if McCain or if Obama wins the election.

Which stocks would benefit from a victory by either Senator John McCain or Senator Barack Obama? To help investors sort through the sectors and stocks best positioned to benefit in a post-election environment, we posed this question to some of the nation's leading financial newsletter advisors.

Importantly, this is not a partisan report; each participating advisor has provided a favorite stock for both candidates, focused not on political preferences but unbiased stock analysis. Below we feature those stocks and ETFs that the advisors believe will be the winners depending on which candidate prevails.

McCain Stocks:

Roger Conrad - Comcast (NYSE: CCW)
Gregg Early - Elbit Systems (NASDAQ: ESLT)
Elliott Gue - Paladin Resources (Toronto: PDN)
Doug Fabian - Market Vectors Nuclear Energy (NYSE: NLR)
Vivian Lewis - Barclays (NYSE: BCS)
Bill Martin - CGG Veritas (NYSE: CGV)'
Yiannis Mostrous - Lonking Holdings (OTC: CIMHF)
Carla Pasternak - Eaton Vance Tax-Advantaged Dividend Income Fund (NYSE: EVT)
Nate Pile - SPDR Gold Trust (NYSE: GLD)
John Reese - General Dynamics (NYSE: GD)
Nathan Slaughter - USEC (NYSE: USU)
Paul Tracy - Shaw Group (NYSE: SGR)
Kelley Wright - CenturyTel (NYSE: CTL)
Tom Vass - Molex (NASDAQ: MOLX)
Martin Hutchinson - Northrop Grumman (NYSE: NOC), Merck & Co. (NYSE: MRK), EOG Resources (NYSE: EOG)

Obama Stocks:

Roger Conrad - SunPower (NASDAQ: SPWR)
Gregg Early - AeroVironment (NASDAQ: AVAV)
Elliott Gue - SunPower (NASDAQ: SPWR)
Doug Fabian - Industrial Select Sector SPDR (NYSE: XLI)
Vivian Lewis - Cosan (NYSE: CZZ)
Bill Martin - Geron (NASDAQ: GERN)
Yiannis Mostrous - Dr. Reddy's (NYSE: RDY)
Carla Pasternak - Kinder Morgan Energy Partners (NYSE: KMP)
Nate Pile - Apple (NASDAQ: AAPL)
John Reese - American Eagle (NYSE: AEO)
Nathan Slaughter - Fluor (NYSE: FLR)
Paul Tracy - Market Vectors Global Alternative Energy (NYSE: GEX)
Kelley Wright - Cardinal Health (NYSE: CAH)
Tom Vass - Ingersoll Rand (NYSE: IR)
Martin Hutchinson - Microsoft (NASDAQ: MSFT), Time Warner Inc. (NYSE: TWX), First Solar (NASDAQ: FSLR)

Over the weekend, I was looking around in the retail universe for potential bargains. Of course, where was I when Wal-Mart (NYSE: WMT) was at its lows? Oh well, can't dwell on the past, I guess.

I came across a stock I've looked at every so often -- American Eagle Outfitters (NYSE: AEO). Its 52-week low is an even $16 per share; the 52-week high is close to double that number. The closing price last Friday was $16.23. It doesn't take a rocket scientist to figure out that sales at the retailer probably haven't been doing too well in this weak economy -- yep, according to this Reuters piece, there was a bad double-digit drop in comps for the month of March. How bad? Try 12%. This led to a reduction for Q1 guidance. And, bingo, you got your weak stock.

Yet, American Eagle is still a decent mall brand, and its P/E ratio, according to AOL Finance, is pretty cheap at a value of about 9. The dividend yield is also worthy of note, as it is over 2%; that's higher than another stock I've been keeping my eye on, Target (NYSE: TGT). But there's a big difference between a Target and an American Eagle -- the latter is obviously more dependent on the whims of fashion trends. It's a different retailing model, catering to a specific demographic, and is thus potentially the riskier play. But as the market starts to discount an improving economy, as many theorize should happen overt the next several months, an American Eagle could rebound nicely. I'm not ready to buy shares yet, but I'll be watching this one.

Disclosure: I don't own shares in any of the companies mentioned here; positions can change at any time.

With weather forecasts predicting frigid conditions for this weekend's NFC championship game at Lambeau Field, here are two stocks that are sure to warm up the shirtless Packer fans.

China Water and Drinks (NASDAQ: CWDK) is China's leading supplier of bottled water. Obviously for football fans, this water will be used to make piping hot coffee to drink at the game. The company is growing very quickly, and while other high-flying Chinese stocks have gotten slam-dunked, CWDK is actually trading up 50% YTD.

Maybe the shirtless faithful should take a trip to the nearest mall and go shopping at American Eagle Outfitters (NYSE: AEO). American Eagle has gotten hit along with the rest of the retail sector, but the company sports a P/E of 10.4, a PEG of just 0.74, and a nice little dividend of 2.1%. With the expected economic pick-up in second half '08, retailers should benefit, and American Eagle is well poised to help investors profit as well.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. Disclosure: Writer has no position long or short in any stock mentioned as of 1/18/08.

Monday September 3

• Markets closed for Labor Day holiday.

Tuesday September 4

• Ford Motor Company (NYSE: F) to report monthly sales at 1pm; General Motors (GM) at 2pm.
• American Dental Partners Inc (NASDAQ: ADPI) to discuss acquisition of Metropolitan Dental at 1pm.

Wednesday September 5

• Apple Inc (NASDAQ: AAPL) to hold media event to introduce "a new array of digital media offerings."
• The Boeing Company (NYSE: BA) to give update on 787 Dreamliner Program at 10am.
• Hot Topic Inc (NASDAQ: HOTT) and Zumiez Inc (NASDAQ: ZUMZ) to report monthly sales at 4pm, American Eagle Outfitters Inc (NYSE: AEO) at 5pm.

Thursday September 6

• Chico's FAS Inc (NYSE: CHS) to report monthly sales at 7:30am, AnnTaylor Stores Corporation (NYSE: ANN), Gap Inc (NYSE: GPS) and Wal-Mart Stores Inc (NYSE: WMT) at 8am.
• PDUFA date for Johnson & Johnson (NYSE: JNJ) and Omrix Biopharmaceuticals Inc's (NASDAQ: OMRI) Thrombin.
• Campbell Soup Company (NYSE: CPB) to report Q4 earnings; conference call at 11am.
• National Semiconductor Corporation (NYSE: NSM) to report Q1 earnings; conference call at 4:30pm.

Friday September 7

• I did not see anything to compelling going on today, please leave a note in the comments section if you think I missed something.

Paul Pressler resigned today after a four-year reign at the helm of Gap Inc. (NYSE:GPS). The company has been losing market share to retailers like Abercrombie & Fitch Co. (NYSE:ANF) and American Eagle Outfitters (NASDAQ:AEOS) for years and, its same-store sales have been down in 29 of the last 31 months.

While Jim Cramer generally says to sell when a key executive resigns, this may be a clear exception. Pressler is being replaced by the son of the founders and Chairman of the Board, and there had been ongoing calls for new leadership. Pressler's resignation is not a surprise nor is it unwelcome. Shares of Gap gained over 3% in after-hours trading when the press release came out.

There has been speculation about a break-up of the company that owns Gap, Old Navy, and Banana Republic. New leadership may make that closer to becoming a reality.

The deals and general craziness of Black Friday have already been well-covered in this space, so I thought it might be interesting to turn your attention to the actual stock reactions. My intentions were simple enough (but aren't they always?): grab a list of retail stocks and calculate the returns from the close on Wednesday, November 22, through this morning. Sorting the list would give a quick (but early) overview of how the Street was reacting to the "day."

I have ample data manipulation tools at my disposal, so I figured this to be an easy task. What I didn't count on was not being able to find what I considered to be a satisfactory list of retail stocks. The lists I found were either too broad or too narrow. I wanted the usual suspects like Best Buy (NYSE:BBY), Wal-Mart Stores, Inc. (NYSE:WMT), and Gap (NYSE:GPS), while also picking up some of the smaller players like Bebe Stores (NASDAQ:BEBE) and Chico's FAS (NYSE:CHS). Additionally I wanted to capture some of the brands like Crocs (NASDAQ:CROX) and dELiA*s (NASDAQ:DLIA), while excluding consumer goods producers and fast food restaurants.

Unable to find a list that suited my (admittedly arbitrary) desires, I began to handpick names and compile a list of 72 stocks. The graph below shows the top and bottom performing stocks through noon today.



Blue Nile (NASDAQ:NILE), Pier One (NYSE:PIR), and Coldwater Creek (NASDAQ:CWTR) are the weakest stocks, while Lowe's (NYSE:LOW), American Eagle Outfitters (NASDAQ:AEOS), and Jo-Ann Stores (NYSE:JAS) are the strongest.

As you can infer from the graph, the bulk of the returns are flat to lower as two of the "best performing" stocks, Aeropostale (NYSE:ARO) and Limited Brands (NYSE:LTD), show a loss. In other words, buying just ahead of Black Friday doesn't seem like it would have been a good short-term trading strategy. Going forward though, I would expect to see some stocks distinguish themselves and separate from the pack. With my list now created (and saved!) it should be much easier to track. If there is interest in this, I can post periodic updates.

Nick Perry is an analyst with Schaeffer's Investment Research.