2011 is looking to be a happy new year for retailers, coming off a very strong holiday shopping season. Estimates project a December growth rate of 3.4% for U.S. stores open a year or more, the best same-store sales for the month since 2006.

While last week's "Snowpocalypse" may have put a slight damper on initial analyst estimates, the general trend remains encouraging. In spite of the curveball Mother Nature threw the East Coast, Ken Perkins of Retail Metrics is "still of the mind that holiday and December sales were solid and could surprise on the upside."

Unusually early holiday promotions gave November sales a boost, and retailers kept the momentum going into December by offering additional incentives: In the days before Christmas, Toys 'R' Us kept stores open round the clock, and Wal-Mart sweetened the deal for shoppers by offering free shipping on merchandise.

But there may be more to the uptick than savvy marketing. Arnold Aronson, managing director at consultancy Kurt Salmon, notes that, "people were not just spending on necessities, they were buying gifts for themselves as well," and suggests that perhaps Americans have finally adjusted to living (and buying) within their means.

Trade groups and firms like the National Retail Federation and the International Council of Shopping Centers would appear to agree. They've raised their outlooks for the months to come -- and sales estimates from firms like ComScore offer strong support for their projections. Department stores are expected to post a 4% average increase, while discount stores (excepting Wal-Mart, which doesn't report its monthly sales) predict a 5.1% increase.

FBR Capital Markets analyst Liz Dunn interprets all this to mean "a lot of upward earnings revisions on retail sales day."

So how do you give your portfolio exposure to the rebounding retail sector? One way to find ideas is to look at what the smart money is doing. Institutional investors manage the money of multi-million, even billion-dollar firms -- so they have a lot more time and money to spend on research than your average retail investor. They tend to be pretty savvy in their trades, so it's not a bad idea to pay attention to where their money's going.

Here's a list of five retail stocks that have seen significant institutional buying over the last three months. The smart money seems to think there's upside to these names -- what do you think? (Click here to access free, interactive tools to analyze these ideas.)



Institutional Transactions Over Last 3 Months

Carter's (NYSE: CRI)

Apparel Clothing

Inst. investors currently own 63,022,739 shares vs. 55,836,457 shares held three months ago (+12.87% change)

99 Cents Only Stores (NYSE: NDN)

Discount, Variety Stores

Inst. investors currently own 57,457,755 shares vs. 54,191,164 shares held three months ago (+6.03% change)

J. C. Penney Company (NYSE: JCP)

Department Stores

Inst. investors currently own 266,919,345 shares vs. 252,271,585 shares held three months ago (+5.81% change)

Skechers USA (NYSE: SKX)

Apparel Footwear & Accessories

Inst. investors currently own 39,785,422 shares vs. 37,664,784 shares held three months ago (+5.63% change)

The Children's Place Retail Stores (Nasdaq: PLCE)

Apparel Stores

Inst. investors currently own 31,603,242 shares vs. 29,952,046 shares held three months ago (+5.51% change)

Institutional data sourced from Reuters. The list has been sorted by the change in institutional ownership.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research. Note: The numbers on top of items represent the forward P/E ratio, if available.

Kapitall's Eben Esterhuizen and Alicia Sellitti do not own shares of any companies mentioned.

Wal-Mart Stores is a Motley Fool Inside Value recommendation. Wal-Mart Stores is a Motley Fool Global Gains pick. The Fool owns shares of Wal-Mart Stores. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.