Retail is heating up. A look at 11 hot retail ETFs to buy now shows that the sector is dramatically outperforming the market so far in 2010 -- up to four times over!

That means if you were holding some of the elite retail components in these funds, you would be doing even better.

• Related: Walmart WMT Might Be Thinking Small on Store Size

Take online retailer Overstock.com (OSTK), up almost 65% in the same period! Any investor who has blacklisted the entire retail sector is missing out on big moneymakers like this company.

What’s more, the macro picture shows that retail should only build on this momentum Consider that consumer spending in the U.S. rose in March by the most in five months, pointing to a recovery that may accelerate even more as the economy creates more jobs.

 

Yes, the market has become a bit volatile lately. But only for some stocks. To help you do just that, here are three discount retail stocks worth a look:

 

The first, of course, is OSTK. Overstock is an online retailer offering closeout and discount merchandise from home decor to jewelry to electronics. The company was forecast to post a loss of 7 cents a share in its most recent earnings report, but instead posted an impressive 16 cent EPS -- a nearly 330% earnings surprise! Just imagine what OSTK can do as consumer spending improves even more.

Priceline.com (PCLN) is another great online retailer. You may not think that travel spending is very high right now, but the bottom line is that value-conscious consumers really love Priceline's ability to 'haggle' on prices. This has allowed the website to become an oasis for cash-strapped consumers and generate huge numbers even during the recession.

The earnings for OWW, EXPE and CTRIP among other online travel stocks are soaring right now, but Priceline.com stands apart thanks to a recent quarterly report where EPS doubled last year’s numbers.

Last but not least, Costco (COST) is one of the biggest forces in the world of discount retail and a good buy right now. Costco earnings are up again at the end of the month on May 27.

Fundamental analysis shows strong sales growth and earnings growth behind COST stock, so there’s a chance the company could see a breakout report in just a few weeks.

• Related: Costco COST stock - 5 Reasons to buy

A number of retail stock upgrades cropped up in a recent fundamental analysis of the sector, and each week that goes by presents more buying opportunities for investors. Don’t sit on the sidelines this spring as retail makes its comeback. You may find the next breakout stock for your investment portfolio.

For more info on these picks plus two more discount retail stocks to buy, read Louis Navellier's stock tips. 

 

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