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Abercrombie & Fitch Turnaround Hinges on a Good Holiday Season

If you want to make a leveraged bet on a turnaround in the retail sector this holiday season, Abercrombie & Fitch Co. (NYSE: ANF) would be a good vehicle. This is a company with expectations low enough that any minor success could push its share price higher, faster than most other retailers. A holiday renaissance for Abercrombie would come at just the right time to take advantage of a new leg up in stocks that should continue through March.

Monday’s big move higher in the major indexes all but put to rest the murmurings of a 10% correction come Thanksgiving, so if Abercrombie is going to turn around, now is the time.

Prospects do not look great though. Unemployment and inflation are both very low, and the economy looks to be moving at a decent pace, so the fact that Abercrombie keeps shrinking in the face of this is...