With the holiday shopping season just around the corner, investors are taking a closer look at retailer stocks. After Macy's (M) reported a quarterly loss and Best Buy (BBY) lowered its earnings guidance, the retailers have taken a beating. However, stock shoppers may find some hidden bargains.

With most investors are bearish about retail stocks during this holiday season, if some of the retailers surprise on the upside, there could be some short-term opportunities. Although some of the higher-end retailers may be hurt, such as Tiffany (TIF), which TheStreet.com Ratings downgraded last week, bargain-hunting consumers will likely turn to shopping at stores such as Sears (SHLD) and Wal-Mart (WMT).

On Sept. 19, Sears was one of the 10 top-searched stocks on TheStreet.com. In the "Lightning Round" segment of his Mad Money TV show on Sept. 18, Jim Cramer, who has been a fan of Sears Chairman Eddie Lampert, said about the stock: "Lots of people have been selling this one short. There are more shares sold short than exists. This one is sitting pretty and I'm long Sears."

Lampert worked for Goldman Sachs (GS) in its risk arbitrage department from March 1985 to February 1988. He then founded ESL Investments, a $10 billion hedge fund that has reportedly returned close to 30% annually since inception. In 2005, Lampert put then-separate Sears and Kmart together to create Sears Holdings.

Sears recently named Michael Collins as senior vice president of finance and chief financial officer. Collins was formerly the senior vice president of planning and analysis at General Electric's (GE) NBC Universal division. Sears has a P/E ratio of 15, which is in line with other retailers and slightly better than Wal-Mart's P/E of 16. The stock has a P/E-to-growth ratio of 1.99, which is a bit on the high side. Generally, you want to see a PEG of 1 to 2, and below 1 is even better.

In addition to giving Sears a second look this holiday season, investors might want to check out Lampert's other retail holdings. In a June 2007 episode of "Mad Money," Jim Cramer said that piggybacking off big-name investors can sometimes be "better than coming up with your own ideas." In such a volatile market, it certainly can't hurt to see what someone with as many successful investments under his belt as Lampert is dipping into now.

One retailer that Lampert owns is AutoZone (AZO), the specialty retailer and distributor of automotive replacement parts. As a matter of fact, TheStreet.com's Jonathan Moreland, reported on Oct. 27 that Lampert just bought 44,000 shares of the company for $4,573,221. Kristin Bentz also discussed the auto parts retailers in a recent TheStreet.com TV video, in which she interviews Robert Gross, the CEO of Monro Muffler Brake (MNRO). AutoZone has a P/E of 11 and a PEG ratio of 0.89.

AutoZone is also owned by Maverick Capital, a Dallas- and New York-based $10 billion hedge fund, which was founded in 1993 with $38 million in capital by Lee S. Ainslie III. It only invests in equities and maintains a balance of long and short positions. Maverick also owns Research In Motion (RIMM), with a P/E of 15 and a PEG of 0.36; Qualcomm (QCOM), with a P/E of 18 and a PEG of 1.25; and Avon Products (AVP), with a P/E of 13 and a PEG of 0.91.

Lampert also owns The Home Depot (HD), a retailer in the home improvement industry. Shawn Ward, at Geezeo.com, reported recently that average sales per customer fell 23% since July at the company. The stock has a P/E of 11 and a PEG of 1.18.

Home Depot is also held by Tweedy Browne, a $13.5 billion investment partnership founded in 1920 that utilizes the Graham-Dodd approach to investing. It also owns American Express (AXP), with a P/E of 8 and a PEG of 0.87, and UniFirst (UNF), with a P/E of 9 and a PEG of 0.73.

For more Lampert-piggybacking ideas, check out the Eddie Lampert portfolio at Stockpickr.com.

Posted on Nov. 16, 2008