Dana Telsey, CEO and chief research officer of Telsey Advisory Group, condensed what's happening in the markets to one letter Friday on "Benzinga Live."

"All of a sudden it's all about the letter 'i' — inflation, investment and definitely invasion," Telsey said.

Continuing on a strictly alphabetical stream of thought, retail is all about the letter "p," she said — product, price and place. Furthermore, following the pandemic, many retail companies are adjusting their processes to include purpose, which will in turn drive profits, she said.

Inflation: One of the best-performing sectors for the inflationary environment is luxury goods, Telsey said: "Because the wealth and the health of the luxury consumer can withstand the pains of pricing pressure points."

Investment: Some of the stocks she named include LVMH Moet Hennessy Louis Vuitton SE (Pink: LVMHF), Capri Holdings Ltd (NYSE: CPRI) and Ralph Lauren Corp (NYSE: RL).

When supply chain constraints ease, she told Benzinga she also expects to see a resurgence in some of the discount retailers.

Invasion: The concerns in Europe amid rising geopolitical tension are real, Telsey said: "International tourist recovery, it seems like it's going to be extended and last longer and that's a concern."

Some stocks have been discounted to the point where they are trading around mid-single digit valuations on a forward basis, she noted.

"The brands are healthier than that," Telsey said. At some point the market will start to estimate how long these dark days will last and there will be a stabilization, she added.

"That's when you see the valuation reset [and] they move higher."

Telsey told Benzinga that she expects the first quarter of 2022 to be the most challenging for stocks amid supply chain headwinds and inflation concerns. There's an expectation that conditions will improve, she added.

"You're not seeing that in the stock prices yet, but that's the opportunity of the future."

Story continues

See the full interview here:

Photo: blickpixel from Pixabay.

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