Specialty Fashion leads resurgent retail

Election certainty and perhaps pre-election stimulus give retailers a boost.

It appears that investors are quickly warming to the impending federal election with the retail sector chalking up some of the best gains on the market today.

The removal of the political uncertainty (Stand by for a post-election small cap rally) that is shrouding the local economy is expected to give the struggling sector a much needed boost, and speculation that Prime Minister Kevin Rudd could offer up some stimulus to give us a nice push along (and obviously win over some voters) is not hurting either.

Among the small cap retailers in the Uncapped 100, Specialty Fashion Group is a standout as the women apparel retailer surged over 5% in afternoon trade.

The fact that the stock had slumped to a five-month low of 76 cents on Tuesday probably caught the eye of bargain hunters, particularly since Canaccord Genuity initiated coverage on Specialty Fashion with a “buy” recommendation earlier this month.

The broker is tipping the company to pay a dividend yield of around 6% in 2013-14 and has a price target that is close to 50% above its current trading price of 81.5 cents.

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