Bear Stearns says buy Federated for Christmas

Leach said he agrees with Kernkraut's view that Federated's private label business will help it draw customers and profits.

Sales of private label merchandise typically provide higher margins because the stores don't have to split profits with an apparel maker.

"A lot of their private label brands are well known, people come there especially to get those brands," Leach said.

Of the 20 analysts with investment recommendations on Federated, 11 rate it "buy" and nine rate it "hold."