Since my market view is somewhat neutral I decided to put on a pair trade. I am long Gap Stores and short XRT calls, which is the retail equal weighted index, as a pair trade. Gap trades at 10 times 2010 estimates net of cash. They are a retailer that actually returns cash to shareholders via dividends and buybacks. The merchandise has gotten much better. I have recently been at the Gap a few times since my son was born and I actually walked out with something for myself. There has been a large improvement since the last time I was there many years back.
I am interested to hear what readers think about shopping at the Gap?