Coming out of ICR 2016 analysts shared a couple insights particularly in retail where valuations remain depressed due to the broader weakness in fundamentals across a lot of the specialty retail names. Among the retail names I focus primarily on my major 5 picks: ANF, LULU, LB, URBN, NKE. Of these five names we got some additional commentary on LULU, LB and URBN. I’m going to focus more on L Brands and LULU as they carry the most strength in terms of sales and earnings. Mizuho Securities thinks that Limited Brands is conservative on EBIT outlook:LB – Buy – PT $110 – We continue to recommend shares as BTE (better than expected) Holiday sales and longer-term initiatives to expand square footage while improving sales productivity provide visibility on topline and margin drivers. Management reiterated plans for ~10%+ EBIT dollar growth in FY16, which we believe could prove conservative. The key word in that entire paragraph was “conservative” outlook by management. Intentional efforts to lower expectations throughout the year implies a series of beats as we close out 2016. In other words, investors or traders have opportunities to position ahead of earnings as the stock seems resilient among the retail basket, and whatever incremental beats the company does produce will be bought heavily. Deutsche Bank shares further commentary on LULU’s inventory levels:We learned that LULU continued to drive very high full-price selling during the quarter despite elevated inventories. Management revealed that during the period from Cyber Monday to Christmas Day, 90% of merchandise was sold at full-price. Quarter-to-date, LULU is selling 85% of merchandise at full-price.After the re-launch of the women’s pant wall that pushed premium prices higher, management received several questions from investors on the opportunity for future AUR increases. Management commented that for the past few years, prices had been fairly static as a result of fallout from the Luon quality shortfalls. With the new pant assortment, however, LULU saw mid-single digit increases in AURs. Typically, there’s a lot of promotional activity during the holiday quarter, but LULU retained premium pricing on heightened volumes, which is good. The recent guidance increase was a mix of higher pricing per unit (referred to as average unit retail or AUR), and better volumes in terms of sales. The company seems strategically positioned to drive sales given the improvement in pricing comps as consumers were willing to move up the product stack to more premium product lines. I believe the retail franchise is in a solid position assuming same store sales continues to ramp and square footage continues to grow by 20% in FY’16. We’ll gain greater visibility on store footprint in Q1’-Q3’16 as retailers like to front-load store openings in the first half of any given calendar year. I’m anticipating SSS growth mid-single digits with store additions adding to the bulk of top-line growth going into the next year. Sales momentum is likely to resume, analysts are more focused on the margin profile and seem fairly conservative on top line expansion. I’m leaning towards sustained store role out due to healthy profitability and leaner inventories freeing up cash for capital expansion. I think LULU is positioned the best among the specialty retailers with L Brands coming in second and ANF coming in third. Wedbush released a report yesterday, and anticipates LULU will report mid-teen sales growth and high-teen EPS growth: We continue to like LULU, a member of the Wedbush Best Ideas List, both near-term and long-term based on (1) strong near-term sales growth, (2) medium term margin expansion potential and (3) long-term international growth. For 2016, we expect comps to remain solid, inventory increases to normalize by end of 1Q, and margin expansion to begin to hit the P&L by 2Q. We raise our 2015/2016/2017 EPS estimates to $1.81/$2.21/$2.77 from $1.79/$2.19/$2.74. We raise our target to $65 from $56 based on a sum-of-the-parts valuation. From my perspective Wedbush has a conservative valuation, and revenue could have more upside. Needless to say, their PT of $65 is reasonable, but the stock could easily move higher given the momentum dynamics and rotation out of laggards in the specialty retail space. The Wedbush analysts are slightly above the consensus in their most recent report. I’m going to run some scenarios over the weekend, and will likely publish my own figures early next week. I’m jumping up and down over LULU, it's the retail stock to own for 2016.