The retail sector has struggled amid inflationary pressures and inventory backup, but this challenging environment could offer investors some good deals on stocks, one financial expert advised.  

Speaking with BNN Bloomberg's Amber Kanwar on Monday, John Kernan, managing director at TD Cowen, said investors are underestimating the value of some key retail players. In these conditions, he looks for retail stocks with conservative Wall Street estimates that also show signs of accelerating growth and improving returns.

“There have been pockets of strength in retail. Broadly the sector has underperformed a bit, but there have been real pockets of outperformance, and that’s what we’re looking for,” he said.

Kernan recommended Lululemon Athletica Inc. (LULU), Dick's Sporting Goods Inc. (DKS) and Deckers Outdoor Corp. (DECK) as his top three picks in the retail sector.

He, his family members, his investment banking clients and his firm do not own shares of Lululemon and Deckers Outdoor. However, his firm and investment banking clients do own shares of Dick’s Sporting Goods.

Check out the full video at the top of the article to learn more.