THIS WEEK'S RETAIL SALES AND CONSUMER INFATION NUMBERS MAY PROVIDE UPSIDE TO STOCKS

Saturday 3/8/2008 2:43 pm CT

By Dave Harris

Oh it's been a tough market! Despite the central bank's plan to pour $200 billion into banks, investors remain uneasy over recession fears. We are probably in a mild recession. Last Friday's jobs data, although expected, was especially weak. A whopping 63,000 jobs were cut in February. Unemployment declined to 4.8 percent and that's a little better. But I think there were a few bright spots in the latest economic numbers. The ISM's report on the service sector wasn't all that bad. Additionally, shoppers are still hitting the Wal-Mart (WMT), Target (TGT) and Costco (COST) stores. Wal-Mart said same-store sales rose 2.6 percent. And just look at McDonalds (MCD). The restaurant performed great last month.  This Thursday, we'll get a better handle on consumer strength when last month’s retail sales come out. I believe that may surprise to the upside and give equities a much needed rally. Here’s what you should do with your money now.

I still think Walgreens (WAG) needs to be bought here. Same-store sales rose 8.3 percent last month. In this environment the likes of Wal-Mart, Costco, and Walgreens are the stocks to have. They all sell drugs, and that's a defensive play. Walgreens closed at $35.53 on Friday, down .11 cents.

A water utility company I like, Aqua America (WTR) had solid year of net income and revenue growth in 2007. They keep adding customers and making acquisitions, while increasing their dividend by 9 percent last month. I would by the stock. It closed .08 cents lower Friday at $18.34. I think it’s going to $30.

Last week was just plain terrible! The DOW fell over 3 percent to land at 11,893.69. The tech-heavy NAZ lost nearly 60 points to 2,212.49. The S&P fell to 1,293.37. The financials are still in a tough spot, with Citigroup (C) still taking it on the chin down to 20.91 by Friday’s close. The bank needs more and more cash to repair itself. Expect more volatility as investors grow nervous.

In addition to retail sales this week, on Thursday jobless claims come out. On Friday the consumer inflation data for February is released from the labor department. Also the consumer sentiment reading from the University of Michigan is announced. No major market movers on the corporate earnings front, but a few specialty retailers report this week. Wednesday is American Eagle Outfitters (AEO) and Hot Topic (HOTT). Thursday, we get Aeropostale (ARO), Pacific Sunwear (PSUN) and Eddie Bauer (EBHI). Friday is Ann Taylor Store (ANN).