Hot Stocks: Steve Madden, Foot Locker & Genesco

Although the retail sector has had its share of challenges in recent weeks, market watchers aren’t withholding buy ratings from all of the companies in the space.

Shoes, and athletic brands in particular, continue to show strength as the overall market grapples with weather and inventory issues.

Here are three stocks keeping market watchers upbeat.

Steve Madden Ltd.

In addition to crediting the company with reinvigorating momentum in fashion footwear, market watchers say they also like Steve Madden’s agility during economic twists and turns.

“We believe [Steve Madden] is managing the business well in an over-inventoried and over-promotional retail environment,” Sterne Agee CRT analyst Sam Poser wrote. “Based on our checks, we believe Steve Madden had a successful Black Friday, with strong traffic in the stores and promotions that were at or below last year’s levels.”

Following meetings with CEO Ed Rosenfeld and Finance Director Derek Browe this week, Canaccord Genuity analyst Camilo Lyon was even more upbeat on his buy-rated stock.

“Our buy thesis, based on strong fashion content coupled with accelerating growth of newly acquired brands (e.g., Dolce Vita and Blondo), continues to unfold,” Lyon wrote on Tuesday. “Despite the heightened promotional retail environment, characterized by excess channel inventory in tall-shafted boots, we believe Steve Madden is faring better than most.”

Foot Locker Inc.

The athletic-footwear category has exhibited borderline immunity to many macroeconomic factors weighing on footwear-and-apparel companies in recent months. Couple that with the fact that Foot Locker earned FN’s nod for 2015 Retailer of the Year and the company is easily a priority pick for analysts.

“Foot Locker remains a top idea for holiday, given its attractive valuation, strong inventory management, remodeled stores, diversified offering, leveraging of expenses and potential for accelerating top-line growth from women’s, kid’s and international expansion,” Citi Research analyst Kate McShane wrote, making a case for reiterating her buy rating on the stock.

As brands such as Nike and Under Armour continue to soar in popularity, analysts point out that Foot Locker remains a top beneficiary of their success.

“Foot Locker’s relationship with Nike has gotten stronger over the years,” Lyon wrote. “While historically Foot Locker had been the basketball destination, the [Nike] relationship has enabled Foot Locker to shift more fluidly from category to category depending on what’s in demand. … Central to its success is the strengthening relationship with Nike, as well as the increasing popularity of other brands, such as Under Armour, Adidas, Puma and New Balance.”

Genesco Inc.

After a standout Q3 performance — with its family-footwear business, Journeys, continuing to outperform — analysts have been particularly positive on Genesco.

CL King & Associates analyst Steve Marotta, Susquehanna Financial LLLP analyst Christopher Svezia and Sterne Agee’s Poser all rate the firm’s stock a buy.

While the Lids Sports Group business has pressured the company for much of the year — the firm adjusted down its full-year estimates as it continues to pump resources into turnaround efforts for the chain — the division saw an impressive 12 percent comp gain in Q3.

“Despite another guide down, it appears as if we might be hitting a turning point (consecutive beat after six misses), with management seeing upside to next year’s estimates,” Svezia wrote. “We were also pleased to see decent capital allocation.”

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