Retail Sector Ideas

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>>> Why Costco Stock Was Sliding Today


Motley Fool

by Jeremy Bowman

June 5, 2025


https://finance.yahoo.com/news/why-costco-stock-sliding-today-184012916.html


Key Points

Costco reported solid comparable sales for May, but it was slower than April and the rest of the fiscal year.

In a note, Wells Fargo expressed concern over the company's valuation.

The stock now trades at a price-to-earnings ratio of 57.


Shares of Costco Wholesale (NASDAQ: COST) fell after the warehouse retailer posted comparable sales for May that were slightly below estimates.

For a stock that's priced to perfection like Costco, that was enough to send the stock down 3.9% as of 2:01 p.m. ET.

Costco is one of the few retailers left that reports monthly comparable sales, as others have backed away from the practice, in part because they think it adds volatility to the stock. Investors sometimes overreact to the numbers. That may be what's happening here.

In May, Costco's comparable sales rose 4.3%, or 6% after adjustment for fuel prices and foreign exchange. That was below its growth rate of 5.8%, or 7.9% after adjustments for the first 39 weeks of the fiscal year. Costco also said that overall revenue rose 6.8% for the four-week period ending June 1.

Those are hardly concerning numbers, but Wells Fargo said in a note this morning that those results were just below expectations of 6.2% adjusted comparable-sales growth.

Though the bank said the retailer continued to perform well, it noted its high valuation and reiterated an equal weight, or neutral rating, with a price target of $1,000.

What's next for Costco?

Investors shouldn't change their thesis on Costco stock based on one month of comparable sales, but today's pullback is a good reminder of why valuation matters.

Costco now trades at a price-to-earnings ratio of 57, meaning high expectations are baked into the stock. While the business is strong, the valuation assumes that its superior growth rate will continue. However, even a moderation to mid-single-digit comps is enough to send jitters through investors, as we saw today. If Costco's numbers disappoint again, the stock could fall further.

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Casey's General Stores - >>> 1 Magnificent Dividend Stock to Buy Right Now as It Soars to New All-Time Highs


Motley Fool

By Josh Kohn-Lindquist

May 27, 2025


https://finance.yahoo.com/news/1-magnificent-dividend-stock-buy-102600492.html


Casey's General Stores, Inc

In 2022, my daughter and I bought shares of Iowa-based convenience store (c-store) and pizza chain Casey's General Stores (NASDAQ: CASY) to add to her custodial account.

Luckily enough, Casey's has more than doubled in value since and is now my daughter's largest holding.

However, rather than adhering to the traditional investing adage of "buy low, sell high," I'm planning to add some more Casey's shares to her portfolio soon.

Preferring instead to trust in the maxim of "winners keep winning," here are four reasons I believe Casey's could continue soaring -- even as it continues to trade near all-time highs already.

Casey's General Stores: The quiet outperformer from Iowa

Home to over 2,900 locations across the Midwest, Casey's is now the third-largest c-store and fifth-largest pizza chain in the United States. Focusing primarily on small towns with a population of less than 20,000 people, Casey's shops often act as the cornerstone eatery for many of the easy-to-miss communities it serves.

Using this playbook, Casey's has generated incredible total returns over the years, rising:

32% over the last year

203% in the previous five years

more than fivefold across the previous decade

5,220% since 2000

47,280% since its initial public offering in 1983

To put this last bullet point in context: Casey's is a 473-bagger -- meaning that a $100 investment in the company's shares in 1983 would be worth $47,380 today.

However, despite these incredible returns, the future could be just as bright for the beloved company.

Plenty of greenfield opportunities

Although Casey's has nearly doubled its store count since 2010, its expansion potential remains vast. Roughly half of the company's stores exist in just three states: Iowa, Illinois, and Missouri.

Casey's currently operates in (and has distribution centers that can serve) 20 states, meaning that there is a long runway for growth ahead for the company as it adds new locations in these other 17 states.

In fact, management believes that roughly 75% of towns with a population between 500 and 20,000 people (within its distribution centers' reach) still don't have a Casey's. Said another way, the company has a long way to go before it would theoretically "overbuild" within the existing geographies it serves.

Best yet for investors, management has shown an appetite for expanding beyond these 20 states as well, using mergers and acquisitions (M&A) recently to tiptoe into valuable new markets such as Texas, Tennessee, and Florida.

Building through (and upon) acquisitions

Not only do these M&A deals move Casey's into new areas, but they also tend to be immediately accretive to earnings thanks to the company's recently formed M&A team.

This M&A team typically looks for smaller c-store chains where they can integrate the Casey's kitchen "know-how." By adding new (or upgrading subpar) kitchen capabilities, Casey's typically boosts these newly acquired stores' inside sales by 20% and their earnings before interest, taxes, depreciation, and amortization (EBITDA) by 70%.

Since Casey's prepared food and beverage sales have a high gross margin of 58%, the added kitchen capabilities help the company generate a 15% return on investment on the average store it acquires and integrates into its model.

Best yet, many of Casey's more recent acquisitions have been in larger cities than those it historically served. Yet the company's cash return on invested capital (ROIC) has continued to climb, showing that it seems to be succeeding in bigger cities.

Should this figure continue rising -- and Casey's continues to report success in bigger markets -- its store count expansion potential could be massive.

Immense dividend potential

Though Casey's may only pay a 0.5% dividend yield, its dividend potential should not be ignored. First off, despite raising its dividend annually for 25 consecutive years, the company's payouts currently only use 13% of its net income.

Management could theoretically spike its dividend yield to 3% and still have net income left over. However, it doesn't want to do this, considering it would rather use its excess earnings on its expansion plans.

Even as Casey's grew its store count over the last 25 years, an investor who bought shares in 2000 and held until today would now receive a 20% dividend yield compared to their original cost basis. This shows the power of buying and holding dividend growers like Casey's.

With management expecting EBITDA to grow by 8% to 10% over the long term, while maintaining a payout ratio between 15% and 20%, double-digit dividend growth could be on the horizon for investors.

Why it's still OK to buy near all-time highs

There's no way to sugarcoat it, Casey's trades at a loftier valuation now than it normally does.

However, I don't believe this is simply an overvaluation from the market. Instead, I think the market has taken note of Casey's store count expansion story and the fact that the company has grown its net income by 19% annually over the last decade.

While this price-to-CFO (cash from operations) ratio of 16 is higher than usual for Casey's, it isn't outrageous compared to the broader market. For instance, if Casey's gave up on all of its growth ambitions and only spent money on maintenance capital expenditures, it would trade at around 18 to 20 times free cash flow (FCF).

This is a hefty discount to the S&P 500's average price-to-FCF ratio, which is somewhere closer to 30. Obviously, we don't want Casey's to quit spending on growth, but I wanted to give this comparison to show its relatively cheap valuation compared to the broader market.

As Casey's continues to steadily march across the U.S. and raise its dividend annually -- all at a sub-market valuation -- I'm perfectly happy to add to my daughter's winning position, even with shares back near all-time highs.

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>>> Jim Cramer Says TJX (TJX) Stocks Presents the "Best Buying Opportunity"


Insider Monkey

by Syeda Seirut

May 26, 2025


https://finance.yahoo.com/news/jim-cramer-says-tjx-tjx-143610085.html


We recently published a list of Jim Cramer Talked About These 13 Stocks. In this article, we are going to take a look at where TJX (NYSE:TJX) stands against other stocks that Jim Cramer discusses.

Cramer highlighted that The TJX Companies, Inc. (NYSE:TJX) stock “represents the best value right now,” as he said:

“I want to highlight to you three retailers that reported excellent quarters in just the last couple of days, and only one was recognized as fabulous, that’s Urban Outfitters. One’s holding on with its fingertips, that’s RL, Ralph Lauren. And then a third, TJX, that’s getting sold off, yet presents, I think, now the best buying opportunity… And then there’s the king of value, TJX. While the stock went down today and has been going down since the quarter reported, keep in mind that it regularly sells off after the quarter, as I said to you, even when the earnings are good.

TJX is a simple story. The values here are extraordinary because they’re selling merchandise that retailers had to rapidly get rid of either to bring in new inventory or to pay the bills. I like it much more, for instance, than Ross Stores, also in its cohort, which really disappointed this very evening as opposed to the faux disappointment for TJX.

T.J. Maxx, HomeGoods, Marshals, they’ve got, they’re great value for all income groups, and that’s kind of what makes it such a great shopping experience. TJX told us that things are going terrific, just right now, great guns. I’d say, what the heck is the stock down for? It is time to buy it. It’s one of the most successful retailers of all time… TJX, the company, has more than 5,000 locations, and management thinks there’s room for another 2000 on top of that. Now, some of their brands are dramatically underpenetrated, especially in Europe.

Again, that’s why I think TJX stock represents the best value right now. Look, there are a ton of terrific retailers, but these three really put up amazing numbers, and only one is being recognized. I see that as an opportunity because it’s just a matter of time before Wall Street realizes that the kings of retail came out, showed you their best stuff this quarter, and you want to get into all of them before everybody else figures out what I just told you.”

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>>> The TJX Companies, Inc. (TJX) is an American multinational off-price department store corporation, headquartered in Framingham, Massachusetts.[4] It was formed as a subsidiary of Zayre Corp. in 1987, and became the legal successor to Zayre Corp. following a company reorganization in 1989.

As of 2019, TJX operates TJ Maxx (in the United States) and TK Maxx (in Australia and Europe), its flagship store chains, along with Marshalls, HomeGoods, HomeSense, and Sierra in the United States, and HomeSense, Marshalls, and Winners in Canada. There are over 4,557 discount stores in the TJX portfolio located in nine countries.[5] TJX ranked No. 80 in the 2024 Fortune 500 list of the largest United States corporations by total revenue.[6] TJX is a publicly listed stock on the New York Stock Exchange (NYSE) under the ticker symbol TJX and has a capital value of $132.27 Billion (August 2024).

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https://en.wikipedia.org/wiki/TJX_Companies


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>>> AutoZone’s CFO says tariffs have minimal impact on margins as sales climb

The vast majority of growth is coming from strategic initiatives, according to the company. ·


Fortune

by Sheryl Estrada

May 28, 2025


https://finance.yahoo.com/news/autozone-cfo-says-tariffs-minimal-113756490.html


Good morning. AutoZone buffers its mufflers against tariff pressure.

Despite tariff fickleness prompting customers to spend more cautiously, the auto parts retailer has seen year-over-year improvement in its failure and maintenance segments.

“Historically, when our consumers are under pressure, our maintenance and failure categories tend to outperform discretionary categories,” said Phil Daniele, CEO of the Fortune 500 company, on Tuesday’s earnings call.

There is a 25% tariff on imported cars and parts, leading to estimated price increases of $2,000 to $15,000, depending on the vehicle; as a result, more consumers are expected to repair their current cars instead of buying new ones, according to analysts.

AutoZone reported that for the quarter ending May 10, net sales rose 5.4% to about $4.5 billion, topping estimates of around $4.36 billion. It’s the company’s first revenue beat in more than a year. Commercial sales grew 11%, with a 3% increase in commercial programs and an 8% uptick in weekly sales per program.

The vast majority of growth is coming from strategic initiatives, such as improved execution, expanding hub and mega hub stores into AutoZone’s markets, and continually enhancing product assortments in both the U.S. and international markets, according to the company.

“For this past quarter, we saw minimal impact from the implementation of tariffs,” AutoZone’s CFO Jamere Jackson said on Tuesday’s earnings call. AutoZone expects to offset any tariff costs in its fourth quarter through actions like working with vendors, diversifying sourcing, and adjusting pricing. These measures should prevent tariffs from having a material impact on gross margins, Jackson said.

The biggest net importer of AutoZone products is China, Daniele noted on the call. However, the company has significantly reduced its reliance on imports from China since the first round of tariffs in 2016 and now sources some products from Eastern Europe and Mexico as well. The company also procures products from domestic suppliers, both free on board (FOB) or direct import, and makes domestic purchases, Daniele said.

“We don’t expect the threat of tariffs to materially affect AutoZone,” Morningstar equity analyst Noah Rohr wrote in a Tuesday note. Most of the parts the retailer sells are essential for vehicle maintenance and repair—products that customers need regardless of price increases, Rohr explained.

FX headwinds

Although AutoZone had a sales beat, it was offset by lower-than-expected margins and a 6.6% drop in quarterly profit. Contributing factors included rising operating expenses and foreign exchange headwinds. For Mexico, FX rates weakened nearly 20% versus the U.S. dollar for the quarter, resulting in an $89 million headwind to sales, a $27 million headwind to EBIT, and a $1.10 per share drag on EPS versus the prior year, Jackson explained. “Excluding the FX headwind, we would have reported an EPS decrease of 0.6% for the quarter,” he said.

AutoZone’s stock price closed at a record $3,880.15 on May 20. It was down about 3.4% at market close on Tuesday. “Margins contracted, but management’s continued investments in its stores and distribution network look cogent and should translate to further share gains in the future,” Rohr said in the report.

Amid times of uncertainty, AutoZone is still moving full-speed ahead with its long-term strategy. “This year, we expect to again invest approximately $1.3 billion in capex in order to drive our strategic growth priorities,” Daniele said on the call.

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>>> BMO Capital Hikes AutoZone Price Target to $4,100, Affirms Outperform Stance


Insider Monkey

by Neha Gupta

May 28, 2025


https://finance.yahoo.com/news/bmo-capital-hikes-autozone-price-210025680.html


AutoZone, Inc. (NYSE:AZO) is well-positioned to continue edging higher. That's the sentiment echoed on May 27 by BMO Capital as the firm reiterated an Outperform rating on the stock. Additionally, the analyst firm hiked its stock price target to $4,100 from $3,850.

The stock has gained 13%, outperforming the S&P 500, which is up by nearly 1%. The impressive runs stem from AutoZone’s strong performance over the past year, characterized by a 32% return. In addition, it boasts a healthy gross profit margin of 53.13% and a free cash flow of over $2 billion.

Tristan Thomas-Martin of BMO Capital shared insights on the automotive parts company’s latest performance and its future outlook. Autozone delivered impressive third-quarter fiscal 2025 results as the company's international business continues to deliver strong results. The results also came in better than expected, attributed to the company's aggressive expansion. The company opened 54 new stores in the US, 25 in Mexico, and five in Brazil.

Revenue in the third quarter was up 5.4% to $4.5 billion. Same-store sales were up 3.2%, driven by a 5.0% increase in domestic sales as international same-store sales grew by 8.1%. However, net income fell by 6.6% to $608.4 million, and diluted earnings per share shrunk by 3.6% to $35.36.

Thomas-Martin acknowledged challenges affecting AutoZone’s margins, including commercial sales growth, currency headwinds, and ongoing investments. Despite this, he remains optimistic about the company’s long-term market potential in a fragmented industry.

AutoZone is a specialty retailer that deals in automotive replacement parts and accessories. It offers a wide variety of hard parts, maintenance items, accessories, and non-automotive products. In addition to their retail stores, AutoZone also provides commercial sales to repair shops and other businesses.

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>>> The TJX Companies, Inc. (TJX), together with its subsidiaries, operates as an off-price apparel and home fashions retailer in the United States, Canada, Europe, and Australia. It operates through four segments: Marmaxx, HomeGoods, TJX Canada, and TJX International.

The company sells family apparel, including footwear and accessories; home fashions, such as home basics, furniture, rugs, lighting products, giftware, soft home products, decorative accessories, tabletop, and cookware, as well as expanded pet, and gourmet food departments; jewelry and accessories; and other merchandise. It offers its products through stores and e-commerce sites.

The TJX Companies, Inc. was incorporated in 1962 and is headquartered in Framingham, Massachusetts.

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https://finance.yahoo.com/quote/TJX/profile/

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>>> TJX price target raised to $145 from $133 at BMO Capital


TipRanks

February 28, 2025


https://finance.yahoo.com/news/tjx-price-target-raised-145-151010765.html


BMO Capital raised the firm’s price target on TJX (TJX) to $145 from $133 and keeps an Outperform rating on the shares. The company saw a top- and bottom-line earnings beat, with all segments having better-than-expected comp performance coupled with a healthy gross margin beat, the analyst tells investors in a research note. The management also noted unfavorable weather to start Q1 but saw improvement as it normalized, the firm adds.

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>>> TJX price target raised to $136 from $135 at Morgan Stanley


TheFly

Feb 27, 2025

https://www.tipranks.com/news/the-fly/tjx-price-target-raised-to-136-from-135-at-morgan-stanley?utm_source=finance.yahoo.com&utm_medium=referral

TJX price target raised to $136 from $135 at Morgan Stanley

Morgan Stanley analyst Alex Straton raised the firm’s price target on TJX (TJX) to $136 from $135 and keeps an Overweight rating on the shares following a Q4 beat that featured “universal comp upside across segments.” Q1 and fiscal year guidance was set below the Street, but “screens conservative,” according to the analyst, who argues that the stock’s 2% move despite below-consensus guidance confirms TJX is “viewed as a scarce, high-quality investment option in Retail.”

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>>> Winmark Corporation Announces Year End Results


Business Wire

February 19, 2025


https://finance.yahoo.com/news/winmark-corporation-announces-end-results-153200853.html


MINNEAPOLIS, February 19, 2025--(BUSINESS WIRE)--Winmark Corporation (Nasdaq: WINA) announced today net income for the year ended December 28, 2024 of $39,954,200 or $10.89 per share diluted compared to net income of $40,178,100 or $11.04 per share diluted in 2023. The fourth quarter 2024 net income was $9,583,100 or $2.60 per share diluted compared to net income of $9,716,800 or $2.64 per share diluted for the same period last year. Revenues for the year ended December 28, 2024 were $81,289,100, down from $83,243,500 in 2023. 2024 results were impacted by the Company’s decision in May 2021 to run-off its leasing portfolio.

Winmark - the Resale Company®, is a nationally recognized franchisor focused on sustainability and small business formation. - We champion and guide entrepreneurs interested in operating one of our award winning resale franchises: Plato’s Closet®, Once Upon A Child®, Play It Again Sports®, Style Encore® and Music Go Round®. At December 28, 2024, there were 1,350 franchises in operation and over 2,800 available territories. An additional 79 franchises have been awarded but are not open.

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>>> "Tractor Supply Company (NASDAQ:TSCO) detracted from performance during the quarter after reporting a slight decline in earnings on sales that were relatively flat. Tractor Supply Company continues to be a best-in-class retailer, focused on serving their niche customers that live in and maintain rural homes and homesteads, often with higher-than-average incomes. During the height of Covid-19 in the U.S., the Company grew substantially faster than its historical rates. Since then, and as consumer spending patterns have over-corrected back towards services, we have seen growth normalize. However, the Company continues to exhibit excellent returns on capital and retains ample addressable market to continue driving expected double-digit earnings growth through 2030." <<<


https://finance.yahoo.com/news/tractor-supply-company-tsco-fell-133349343.html


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>>> Casey's General Stores, Inc. (CASY), together with its subsidiaries, operates convenience stores under the Casey's and Casey's General Store names. Its stores offer pizza, donuts, breakfast items, and sandwiches; and tobacco and nicotine products. The company's stores provide soft drinks, energy, water, sports drinks, juices, coffee, and tea and dairy products; beer, wine, and spirits; snacks, candy, packaged bakery, and other food items; ice, ice cream, meals, and appetizers; health and beauty aids, automotive products, electronic accessories, housewares, and pet supplies; and ATM, lotto/lottery, and prepaid cards. In addition, its stores offer motor fuel for sale on a self-service basis; and gasoline and diesel fuel, as well as car wash services. It also operates distribution centers. Casey's General Stores, Inc. was founded in 1959 and is headquartered in Ankeny, Iowa.

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https://finance.yahoo.com/quote/CASY/profile/


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>>> Walmart is the 2024 Yahoo Finance Company of the Year


Yahoo Finance

by Brian Sozzi

December 16, 2024


https://finance.yahoo.com/news/walmart-is-the-2024-yahoo-finance-company-of-the-year-110030254.html


Now past its sixth decade, Walmart (WMT) is getting its second wind.

The legacy retailer, once seen as slow to adopt technology as Amazon (AMZN) rose to the forefront, has quietly invested in everything from artificial intelligence and augmented reality to same-day delivery and cheap groceries. The combo punch has led to nearly four quarters of record earnings — and a title as Yahoo Finance's annual Company of the Year award winner.

A committee of Yahoo Finance editorial leaders selected Walmart because of its strong year of sales and profits, financial outperformance relative to key rivals like Target (TGT), and a stock price that has reached fresh records in 2024.

"I'm a pretty conservative, kind of play-it-safe kind of person," longtime CEO Doug McMillon said in an exclusive sit-down inside a Walmart supercenter near its Bentonville, Ark., headquarters.

"But to get the change that we needed, we had to take risks in the form of acquisitions, in the form of big investments. Those can be breathtaking at times, but that's one way that I know I've changed — I'm faster to accept risks than I was before."

McMillon, who climbed the ranks from loading Walmart trucks in his teens to the top of America's largest retailer, is charging ahead as the business enters a 2025 fraught with uncertainties. Through the years, some Walmart lifers have gone so far as to paint McMillon as founder Sam Walton reincarnated — though the humble, deeply religious McMillon would never repeat those words.

Yet his vision has vaulted Walmart to the top of the Yahoo Finance stock charts, even as consumer sentiment struggles amid high inflation and the company deals with controversial decisions such as mandatory return to office and rolling back diversity, equity, and inclusion (DEI) initiatives.

In August, Walmart said it would cut prices on 7,200 products to maintain "competitive price gaps" with rivals. The result? The company trounced cheap-chic rival Target in its third quarter despite Target's own slew of price cuts.

Earlier this month, Walmart closed on its $2.3 billion acquisition of smart TV maker Vizio. The deal will yield a plethora of consumer data while turbocharging an advertising business growing at a double-digit sales pace a quarter.

Walmart's shares are up 82% year to date, compared to a 27% gain for the S&P 500 and an 18% advance for the Dow Jones Industrial Average.

"I'm aware [of the stock price]," McMillon said, chuckling as we chatted inside the produce section. "I try not to focus on that too much. It's the inputs that drive the outputs, and I spend my time on the inputs."

The year when everything clicked

I met McMillon somewhat early in his CEO tenure in 2017. We set up shop inside a hotel lobby in New York City and talked for 30 minutes or so. I remember coming away thinking McMillon was a quietly intense guy who maybe had the best grasp on his business of any executive I knew.

When we reconnected in Bentonville just prior to Black Friday madness, McMillon appeared to be the same guy I met in 2017 — but with the elevated confidence befitting a battle-tested executive.

"I go back to before the pandemic," McMillon recalled. "[When] we invested in wages for our associates, we invested in our people in things like education, we invested in lower prices, we invested in e-commerce, and we invested in technology all within a pretty tight period of time."

"That obviously created some pressure on the bottom line and some overhang for how people think about Walmart."

The bets paid off as the pandemic spurred an age of curbside pickup and fast deliveries. "I think it caused a lot of people, customers and our associates, to recognize that we were on the right track. And we just kind of haven't looked back since then," he said.

The company is becoming very competitive with Amazon as it offers more items online and grows its third-party seller marketplace. It's working on generative AI-powered chatbots and making the site more responsive and personalized.

It's also leaning into same-day delivery and buy online, pickup in store. Walmart has begun using drone delivery in the Bentonville area and has ambitions to bring that to life in more towns.

The chain is gaining market share from high-income households who are noticing the vastly improved shopping experience. It's a callout Walmart has mentioned in each of its earnings reports this year as the retailer shakes its no-frills image.

"Walmart has become a much better competitor," noted retail strategist Jan Rogers Kniffen.

In 2017, Amazon took 36.4% of sales among Digital Commerce 360's top 2000 North American online retailers, while Walmart accounted for a paltry 4.4%. This year, it projects Walmart will have a 10.6% share to Amazon's 39.7%.

"They are reaching new limits on what a mature company can do," Neuberger Berman analyst John San Marco told Yahoo Finance.

Despite Walmart's gargantuan size and competitive industry dynamics, the raw numbers support the view that the company will set the bar even higher in 2025.

Walmart rings the register financially

Walmart's third quarter showed a retailer capitalizing on penny-pinching consumers on both the low-income and higher-income spectrums.

The company beat Wall Street estimates on sales and earnings, powered by a 5.3% comparable sales gain at its largest division — its namesake US business.

Walmart US saw sales gains in higher-frequency product categories such as food and health and wellness. Its global e-commerce sales rose a hearty 27%. The company lifted its full-year forecast again, with a sales growth of 4.8% to 5.1%. The midpoint of its earnings outlook of $2.45 per share represents an 11% year-over-year jump.

For the nine months ending on Oct. 31, Walmart added close to $26 billion in sales compared to last year. It spent $3 billion on stock buybacks — more than three times that of a year ago. Its operating margins at Walmart US, Walmart International, and Sam's Club expanded despite consumer headwinds and investments in tech.

Yahoo Finance data shows that 90% of analysts who cover Walmart rate the stock a Strong Buy or Buy.

"So [the results] didn't happen by accident," Walmart CFO John David Rainey told me inside the company's palatial health and wellness center in its soon-to-open new headquarters.

"And what you're seeing right now is all the pieces of this strategy beginning to come together, and it's coming together in a way where between this year and next year, we'll grow operating income about 10% on average each year."

By comparison, Target has had a dreadful year.

In November, the company badly missed third quarter profit forecasts, slashed full-year guidance, and took a cautious stance on holiday sales and profit. Its same-store sales rose a meager 0.3%.

Year to date, Target's sales have barely budged at $75.7 billion. Same-store sales dropped 0.5%, weighed down by shoppers spending less per visit. The online business is growing at a fraction of Walmart's pace.

"Walmart has been much more successful with the more affluent Target customers than anyone thought they could be," Kniffen said. "I think that they have out-invested Target regarding technology."

The wild card with Walmart's outlook is twofold, though it's borne from the same issue.

If President-elect Donald Trump hammers China with stiffer tariffs, it would elevate costs for a sizable chunk of Walmart's goods, hitting its profit margins. And if Walmart passed on some of the hikes, then its price-sensitive consumers could pull back on their spending.

For a stock priced for perfection at a multiple of 24 times estimated forward earnings, investors expect more growth — not disappointing tariff-related outlooks.

The tariff drama isn't lost on McMillon.

"We're positioned to manage it, but what I worry about is customers experiencing higher prices, and we're going do everything we can to try and keep them low," McMillon said. "We encourage [leaders] to be strategic and really thoughtful with them and help them understand how the math works."

No straight path to success

It would be folly to think corporate America is a perfect machine. Decisions made at the top often trickle down and impact performance over time.

And Walmart's top brass made a few choices that have upset the apple cart this year — with unquantifiable long-term effects.

First, there was a decision this summer to implement a strict return-to-office policy. Most employees, notably top executives, were required to relocate to the Bentonville headquarters by Oct. 31.

Sam's Club's chief technology officer Cheryl Ainoa reportedly resigned over the policy. A few Walmart employees Yahoo Finance talked to were unhappy and viewed the policy as a cost-cutting exercise. They're unsure if they'll stay at Walmart.

In the future, how such a strict mandate will shape Walmart's workforce is anyone's guess as workers continue to demand more flexibility and work-life balance.

The company is building a 350-acre futuristic campus in Bentonville to house about 15,000 employees. The hope is to attract the best talent by offering modern workspaces, affordable childcare, and plush amenities like the aforementioned health and wellness center replete with massage chairs, cryotherapy rooms, pools, pickleball courts, and cooking classes.

McMillon stood by the decision to join the likes of Amazon and JPMorgan (JPM) in requiring workers to be in the office.

"We learn so much by being around each other," he said of the return-to-office policy. "We could execute remotely from a task point of view, but not as much innovation, not as much relationship building. The things that we get by being together are sometimes hard to measure but really valuable to us."

Another unknown is the impact of Walmart's Nov. 26 decision to scale back its DEI work amid right-wing pressure. The decision came a few days after our interviews with McMillon and Rainey, at which time Walmart had already secured its Yahoo Finance Company of the Year recognition.

The company said it's ending racial equity training programs for its staff. It's also evaluating programs designed to grow supplier diversity. Walmart had been focused on increasing the number of suppliers that are at least 51% owned or managed by a woman, minority, veteran, or someone who identifies as LGBTQ.

The company is reviewing its funding of Pride and other events. Target said in May it would limit Pride merchandise following backlash that weighed on sales.

Walmart will not extend its Center for Racial Equity, a $100 million philanthropic commitment to tackle the causes of inequity African Americans face in education, health, criminal justice, and other areas. The pledge was made in 2020, then an important initiative by McMillon.

The company is the largest private employer in the US, with about 1.6 million workers. More than half of its hourly employees and 42% of management are people of color, per its own data.

Its decision was met with a sharp reaction from DEI experts.

"Older generations tend to consider it is not preferable or desirable for companies to be engaged in these social conversations. Whereas millennials, they tend to be more supportive for this trend. So as millennials are becoming more of the backbone of this economy, there can be some potential consequences," M.K. Chin, associate professor at the Indiana University Kelley School of Business, told Yahoo Finance.

In a Dec. 2 phone call with Yahoo Finance, Walmart's chief people officer, Donna Morris, defended the company's choice.

"We are the exact same company today as we were last week, and we will continue to be the same company," Morris said. "We act with integrity, we serve our customers and our members, and we strive for excellence. So our values are absolutely not changing."

Morris said Walmart has been working on these changes since 2022 and did not cave to any right-wing person or group. Moving forward, Morris said, Walmart will be focused on "belonging."

The next chapter -- and beyond

When asked where he sees himself in 10 years, McMillon laughed and said wherever Shelley, his wife of 33 years, tells him to be. Pressed further, McMillon noted he's a leader living in the moment and not spending a lot of time plotting his life after Walmart.

"I was with our leadership team this morning; we were talking about Warren Buffett's comments that he made during one of our board dinners many years ago about avoiding the ABCs of business: arrogance, bureaucracy, and complacency," McMillon said.

"So today I was asking our big group, do you remember what the ABCs are? That's what we're trying to avoid."

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>>> Maplebear Inc. (CART), doing business as Instacart, engages in the provision of online grocery shopping services to households in North America. It sells and delivers grocery products, as well as pickup services through a mobile application and website. It also operates virtual convenience stores; and provides software-as-a-service solutions to retailers. The company was incorporated in 2012 and is based in San Francisco, California.

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>>> Berkshire likes Ulta Beauty

https://finance.yahoo.com/news/warren-buffett-buys-beautifully-cheap-123300605.html

One of the more interesting of Buffett’s second-quarter moves was the purchase of 690,000 shares of Ulta Beauty (ULTA) , worth $266 million at the quarter’s end.

Ulta is the country’s largest specialized beauty retailer.

The stock traded at $366 on June 15, up 11% from a day earlier on the Buffett news. It’s still down 25% year to date amid strong competition.

TheStreet Pro columnist Paul Price is another Ulta bull.

The veteran investor, who worked at Merrill Lynch and Wells Fargo, recommended the stock in a column the day before news of Berkshire’s purchase.

Ulta’s 234% shareholder return over the past 10 years represents a 57% discount to its cumulative earnings-per-share growth, he said.

So Ulta’s forward price-earnings ratio stands at 12.4 versus a 10-year average of 25.2.

“That means you can now own this top-quality, proven grower at much less than the market multiple of far inferior companies,” Price said.

Two analysts bullish on Ulta Beauty

Oppenheimer analyst Rupesh Parikh also is an Ulta enthusiast. He was impressed with Buffett’s move and the market’s reaction to it.

“The firm views this development as a vote of confidence for the company’s longer-term prospects and a further validation of Ulta’s significantly discounted valuation,” he wrote in a commentary cited by The Fly.

Parikh rates Ulta as outperform, with a price target of $450.

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Winmark - >>> While Amazon is one of the best-known companies in the world, Winmark (NASDAQ: WINA) flies under the radar. Winmark is a franchisor of stores that resell used items. Its brands include Play it Again Sports, Plato's Closet, Once Upon a Child, and others. Winmark has been a winning stock for a long time, but it's still relatively small, with a market capitalization of $1.4 billion.

https://finance.yahoo.com/news/2-magnificent-stocks-im-never-134500518.html

What's attractive about owning Winmark's stock is its business model. As a franchisor, most of the costs associated with owning a retail business fall on the franchisees. This provides Winmark with attractive margins.

For example, in second-quarter 2024, Winmark's gross margin was 95.8%. Looking further down the income statement, this led to a net profit margin of 51.8%. These margins have also ticked up slowly and steadily over time.

While it's clear that the economics of being a franchisor work out well for Winmark and its shareholders, there's evidence that its franchisees are happy as well. In Q2 2024, Winmark had a 100% renewal rate in four out of five of its brands.

Winmark adds new stores throughout the year, but the pace is deliberate. So far in 2024, the company has grown its total store count by 1.2%. The fact that its franchisees renew in such high numbers is a good sign for the future of the business, as it helps supplement the slow but steady store growth.

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>>> Walmart Inc. (NYSE:WMT), the world’s largest retailer, is renowned for its extensive footprint and ability to generate steady cash flows, making it a prime candidate for dividend investors.

https://finance.yahoo.com/news/3-must-dividend-stocks-according-180056727.html

“Dividends continue to be a part of our diversified capital returns approach. We're proud to be increasing our annual dividend for the 51st consecutive year. This year’s nine percent increase is the largest in over a decade, and a sign of our confidence in our growth potential and cash flow,” said Walmart’s CFO and executive vice president, John David Rainey, in a news release.

The company joined the elite ranks of Dividend Kings in 2024, having increased its dividends for the 51st consecutive year in February 2024. Walmart currently pays an annual dividend of $0.83 per share, resulting in a yield of 1.23% on its current stock price. Earlier in February, the company made headlines with a 9% hike in its annual payout – the largest increase over a decade.

Tigress Financial has a "Buy" rating on Walmart with a price target of $86, indicating a potential upside of over 26%. KeyBanc also has a "Buy" rating on the company with a price target of $82, indicating a potential upside of nearly 21%.

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>>> Casey's General Stores to Buy Fikes Wholesale for About $1.15B


MarketWatch

July 26, 2024

By Denny Jacob


https://www.marketwatch.com/story/casey-s-general-stores-to-buy-fikes-wholesale-for-about-1-15b-update-852c69af


Casey's General Stores agreed to acquire Cefco Convenience Stores owner Fikes Wholesale in an all-cash deal worth about $1.15 billion.

The convenience-store chain's acquisition would include 198 retail stores and a dealer network throughout Texas, Alabama, Florida and Mississippi, which will increase Casey's footprint to nearly 2,900 stores. The transaction also includes a fuel terminal and a commissary to support stores in Texas.

Casey's Chief Executive Darren Rebelez said the acquisition expands its presence in the Lone Star State by bringing 148 additional stores to the area.

Expanding into Texas, Alabama, Florida and Mississippi extends its reach further from neighboring states such as Oklahoma and Tennessee. Casey's footprint is primarily concentrated in the Midwest, according to an investor-day presentation.

Casey's acquisition fits into a strategy laid out at its investor day in June 2023. The company guided for more than 350 additional stores to be built or acquired by fiscal 2026, putting it more than three-quarters of the way to its minimum goal.

The Fikes acquisition speaks to consolidation in the convenience-store industry that is facing declining tobacco sales, rising cost pressure and labor shortages.

Casey's said it expects to achieve about $45 million in annual run-rate synergies after kitchen installations in the acquired stores are completed.

The deal, financed through balance-sheet cash and bank financing, is expected to close in the fourth quarter.

Fikes and Cefco began as a single "filling station" in Cameron, Texas, in 1952 and grew to operate stores in multiple states.

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>>> Costco Hikes Annual Membership Fee for First Time Since 2017


Bloomberg

by Jaewon Kang and Brendan Case

Jul 10, 2024


https://finance.yahoo.com/news/costco-raises-annual-membership-fee-202829281.html?.tsrc=fin-notif


(Bloomberg) -- Costco Wholesale Corp. is boosting its membership fees for the first time since 2017, raising the charge for a basic membership to $65 a year from $60.

The 8% price increase for US and Canadian members will take effect Sept. 1, Costco said in a statement Wednesday. The price of the retailer’s premium membership will rise to $130 from $120. The move will affect about 52 million memberships.

Costco shares rose 2.4% at 5:40 p.m. in extended trading in New York. The stock has gained 34% this year through Wednesday’s close, outpacing the advance of the S&P 500 Index.

Investors and analysts have long waited for the Issaquah, Washington-based company to raise its membership price. Costco has typically increased fees every five years or so, prompting analysts in recent quarters to ask about the company’s thinking on the timing.

Executives had said an increase was only a matter of time, and that the company has experienced strong renewal rates, new sign-ups and customer loyalty. On earnings calls, they have acknowledged that an increase has taken longer than usual to materialize.

Jennifer Bartashus, a Bloomberg Intelligence analyst, wrote in a Wednesday note that the fee increase was expected and overdue from Costco’s usual five-year cadence.

“The company delayed an increase amid consumer concerns about inflation and the economic outlook, which have eased some,” she wrote, adding that she expects renewal rates to stay steady after the increase.

US consumers have faced surging prices across the economy in recent years, though increases have started to moderate. Retailers are anticipating inflation will return to more normalized levels of low single digits this year, and have reported drops in some areas, including general merchandise.

Costco’s customer base tends to be more affluent given the company’s membership model, and it has been relatively insulated from the broader pullback in sales growth and discretionary spending across the sector. The company said Wednesday that US comparable sales, excluding gasoline, grew 6.3% in June from a year ago.

Membership income is especially important for Costco, which has used the proceeds to invest in its operations and keep the price of goods down. The higher fees will provide a profit tailwind for Costco, which tries to entice shoppers with low prices on bulk amounts for a relatively narrow assortment of goods. Premium memberships have driven growth, and make up just over half of Costco’s total paid members.

Costco appointed a new chief financial officer earlier this year, hiring Gary Millerchip from Kroger Co. Ron Vachris has served as chief executive officer since January. The company has been adding more stores in the US and overseas, while investing in e-commerce.

The company is following Sam’s Club, owned by Walmart Inc., in raising the price of its membership as US consumers flock to warehouse stores that offer wholesale quantities of goods. Sam’s Club boosted its annual fee to $50 for basic and $110 for premium in 2022, although it used its rewards program to return the extra cost to members during the first year.

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Costco - >>> Why Are Gold Bar Sales Surging at Costco?


The New York Times

by Rebecca Carballo

April 11, 2024


https://www.yahoo.com/news/why-gold-bar-sales-surging-175059774.html


Alongside its $1.50 hot dog and soda combo, gallon tubs of mayonnaise and value packs of socks, Costco, the warehouse retailer, has been selling gold bars since October.

Now, Costco is selling up to $200 million worth of gold and silver each month, according to an analysis from Wells Fargo.

Online forums and Reddit threads have cropped up where customers give one another advice on how to purchase the bars before they sell out.

“I’ve gotten a couple of calls that people have seen online that we’ve been selling one-ounce gold bars, yes, but when we load them on the site, they’re typically gone within a few hours,” Richard Galanti, Costco’s executive vice president and chief financial officer, said in an earnings call in September.

Costco started selling gold bars in October.

Costco is now selling one-ounce, 24-karat gold bars, according to its online store. The bars can be purchased only by members, and the price varies based on market rates. As of Thursday, the bars were sold out for members online, but The Wall Street Journal reported that shoppers purchased them for around $2,000 in December.

Costco has also been selling silver coins, advertised as 99.9% pure silver, since January, according to an analyst report from Wells Fargo.

People buy gold in times of turmoil.

The precious metal has set a series of records as it surged to $2,350 per troy ounce, up roughly $300 since the start of March.

Buying gold becomes more common in times of economic turmoil. Although the U.S. economic outlook has improved and inflation has slowed, it remains higher than the targets from the Federal Reserve, said Sadiq S. Adatia, the chief investment officer for BMO Global Asset Management. And on Wednesday, a key inflation rate was revealed to be stronger than expected.

Investors have said they were puzzled about the rally.

Geopolitical concerns could also be a factor in an increasing interest in gold, Adatia said. There has been more interest in gold since Ukraine’s currency collapsed after Russia’s invasion, he said.

For those looking to purchase gold for the first time, Costco provides familiarity and ease, Adatia said.

“They make it convenient,” he said. “People can physically go in and pick it up and that’s it, versus opening up an account and buying gold shares.”

How much is Costco profiting from this?

Probably not too much.

Given its pricing and shipping costs, it’s likely a “very low profit business at best,” analysts with Wells Fargo wrote in a note to clients on Tuesday.

Costco sold more than $100 million of gold during its first quarter, or the three-month period ending on Sept. 30 last year, Galanti said on a December earnings call. However, those sales have likely grown since then and may now be running at $100 million to $200 million per month, which could increase its sales figures by 1%.

“The reason that we looked at this is that it’s becoming a larger contributor to sales for them,” said Edward Kelly, managing director of equity research at Wells Fargo. “It’s not that $100 or $200 million a month is a lot for Costco, but it’s new business and they didn’t have that business last year.”

In the three-month period ending on Dec. 31, Costco’s e-commerce sales grew 18% compared with the same period a year earlier, driven in part by demand for the precious metals, Galanti told investors on an earnings call in March.

Investing in metals can be volatile.

The Commodity Futures Trading Commission has urged caution when buying gold because precious metals can be highly volatile.

“Like other commodities, precious metal prices rise as demand goes up, so when economic anxiety or instability is high, the people who typically profit from precious metals are the sellers,” the agency said in a statement.

The commission likely puts that warning out to signal that it is not a guaranteed investment, said Larry Tentarelli, chief technical strategist for Blue Chip Daily Trend Report. He recommends the average person invest 3% to 5% of their assets in gold.

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>>> Home Depot bulks up Pro-business with $18.25 billion deal for building products supplier SRS


Reuters

by Deborah Mary Sophia, Savyata Mishra and Abigail Summerville

Mar 28, 2024


https://finance.yahoo.com/news/home-depot-buy-srs-distribution-101427534.html?.tsrc=fin-notif


(Reuters) -Home Depot will buy building materials supplier SRS Distribution in an $18.25 billion deal, in the top U.S. home improvement chain's largest acquisition, as it looks to broaden its professional customer base to better tackle tepid demand.

The company and rival Lowe's Cos have projected a slower recovery this year as U.S. consumers pause big home remodeling and renovation projects due to sticky inflation.

This has put pressure on the Do-It-Yourself (DIY) segment, which makes up about half of Home Depot's business, and the company has sharpened its focus on "Pro-customers" such as professional builders and contractors to drive sales.

Thursday's deal will help Home Depot leverage SRS' warehouse network and delivery fleet to better serve existing customers.

SRS, a portfolio company of private equity firms Leonard Green & Partners and Berkshire Partners, primarily serves Pro-customers including roofers, landscapers and pool contractors. The firm, which raked in $10 billion in revenue in 2023, will operate as an independent unit within Home Depot.

Leonard Green had bought a majority stake in SRS in a $3.55 billion deal in 2018, a person familiar with the matter told Reuters on Thursday.

Last December, Leonard Green allowed some of its fund investors to cash out of SRS at a valuation of about $16 billion, including debt, the source said, adding Home Depot agreed to the deal following a sale process for the company.

"This is a great deal at a great time," said Thomas Hayes, chairman at Great Hill Capital.

"You need (to) only look to the housing shortage - and young demographics of our millennials - to understand that as rates moderate construction will boom," he said.

Shares of Home Depot, which has a market value of $382.42 billion according to LSEG data, slipped 1%. Home Depot will assume SRS' debt and will fund the deal with cash on hand and debt.

'DRIVING CUSTOMER EXPERIENCE'

The deal is all about "driving the customer experience" along with sales and profitability, Home Depot CFO Richard McPhail said on a call with analysts.

The company has often faced criticism from customers, particularly larger contractors, over order, delivery and logistics hiccups that could hinder timely completion of projects.

"The problem with (ordering on Home Depot's website) is when it comes to delivery, it's very sporadic ... the problem was always logistics" said Eddie Prchal, CEO of Gunner, a roofing solutions firm.

Through the deal, expected to close by the end of fiscal 2024, Home Depot will add SRS' network of more than 2,500 professional sales force in 760 plus locations to its footprint of over 2,000 U.S. stores and distribution centers.

It would also allow Home Depot to take advantage of SRS' more than 4,000 truck fleet and jobsite delivery capabilities.

"SRS is very good at delivering those things. (They have) good customer service, deliveries on time... So Home Depot will be able to start servicing and have a whole new focus on contractors," Prchal said.

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>>> Why Costco is selling gold bars and silver coins


CNN

by Nathaniel Meyersohn

March 7, 2024


https://finance.yahoo.com/news/why-costco-selling-gold-bars-173244588.html


Costco locked in $1.50 hot dog-soda loyalists. Now, it’s chasing a different clientele: precious metal investors and collectors.

Costco recently started selling silver coins for the first time, finance chief Richard Galanti told CNN.

The company is selling 25-count tubes of 1 oz. Canada Maple Leaf Silver Coins online for $675. The front of the coins features a maple leaf, and King Charles III is on the back. The coins are non-refundable, and members can purchase a maximum of five.

Costco is trying to replicate its recent success with gold bars. It began selling $2,000 gold bars online in September and sold more than $100 million worth of the bars last quarter.

But Costco’s move is more about marketing than just about increasing sales. After all, not many people are actually stashing away gold bars in their homes.

It’s selling precious metals to try to reinforce its “treasure hunt” brand image where it peppers its stores with unexpected, limited-time items to keep shoppers coming back.

“We try to create an attitude that, if you see it, you ought to buy it because chances are it ain’t going to be there next time,” Costco’s founder once said. “That’s the treasure-hunt aspect. We constantly buy that stuff and intentionally run out of it from time to time.”

Costco is also selling precious metals as they become more valuable. Gold prices have notched record highs this week. Silver futures are up 21% in the past year.

Precious metal prices have gone up because investors are betting that the Federal Reserve will cut interest rates in the back half of the year.

Gold and silver are considered to be one of the most resilient investments. When interest rates fall, holding income-paying assets (like bonds) becomes less appealing than owning the precious metals. When interest rates are low, falling or — as in this case — expected to fall, demand for Treasury bonds ebbs, and precious metals, which don’t pay out any interest, become relatively more attractive.

Some investors also believe them to be a hedge against inflation, wagering that they will hold their value even if it begins to surge, even though metals face price fluctuations like any other commodity.

Costco’s success in selling the metals comes as the company continues to report strong profits from the pandemic in 2020, when customers rushed to stores to load up on groceries and household staples. Millions of first-time customers signed up for club memberships during the pandemic and have held on to them, pushing Costco’s member rolls to all-time highs.

Shares of Costco (COST) have rallied 60% over the past year.

Costco reported quarterly earnings Thursday. The company’s sales at stores open for at least one year increased 5.6%, but fell short of analyst forecasts.

Costco said inflation was roughly flat during the quarter, which allowed it to reduce prices on some items.

Galanti told analysts on a call Thursday that Costco cut reading glasses, for example, from $18.99 to $16.99 and cut a 48-count of batteries from $17.99 to $15.99.

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>>> Dollar Tree Down Most Since May on Plan to Shut 1,000 Stores


Bloomberg

by Jaewon Kang

3-13-24


https://www.msn.com/en-us/money/companies/dollar-tree-down-most-since-may-on-plan-to-shut-1-000-stores/ar-BB1jOWBv?OCID=ansmsnnews11


(Bloomberg) -- Dollar Tree Inc. plans to shutter about 1,000 stores in an effort to improve profitability as the discount retailer battles a spate of litigation and other headwinds.

The company expects to close about 600 Family Dollar stores in the first half of fiscal 2024 and shut down an additional 370 Family Dollar and 30 Dollar Tree locations as their leases expire, according to a statement Wednesday. Dollar Tree said it expects a benefit of 15 cents a share to 2024 earnings from the store closures.

The shares fell as much as 14% at the open of US markets, the most since May.

Dollar Tree, which operated more than 16,770 stores across 48 states and Canada as of last month, said last year that it would review its portfolio of Family Dollar stores to address underperformance. The chain has been beset by complaints of miserable working conditions, and fourth-quarter adjusted earnings of $2.55 a share included an impact of about 17 cents a share from general liability insurance claims.

Closing the stores appears to be “a prudent decision, but echoes the move to close 400 stores in 2019,” Bloomberg Intelligence analysts Jennifer Bartashus and Jibril Lawal said in a note. “Nearly $2 billion in assorted impairment charges suggests widespread efforts to improve operations have had mixed results and that the right formula remains elusive.”

The earnings for the quarter that ended in February missed analysts’ average estimate of $2.66 a share. Same-store sales rose 3%, more than Wall Street expected.

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Abercrombie - >>> This Once-Bankrupt Retailer Went From Facing Boycotts To A 285% Stock Price Increase And Now Is Outpacing Nvidia


Benzinga

by Caleb Naysmith

March 4, 2024


https://finance.yahoo.com/news/once-bankrupt-retailer-went-facing-212719788.html


Over the past decade, Abercrombie & Fitch Co. (NYSE:ANF) has undergone a significant transformation, bouncing back from its lowest point to reestablishing itself as a dominant player in the retail landscape.

In 2023, Abercrombie & Fitch experienced a 285% increase in its stock price, followed by more than 50% uptick so far in 2024. While other fashion retailers like American Eagle Outfitters Inc., Levi Strauss & Co. and Macy’s have also seen growth in their stock prices in 2024, none have matched the rise of Abercrombie & Fitch.

Abercrombie & Fitch even outpaced artificial intelligence (AI) powerhouse Nvidia Corp. in 2023, a feat that caught many by surprise given Nvidia’s formidable reputation in the technology sector. Nvidia saw a 238% stock price growth in 2023.

Abercrombie & Fitch is seeing constantly growing sales. Revenue was up 20% compared with the previous year, according to its third-quarter report.

A key factor in Abercrombie & Fitch's success has been its strategic use of platforms like TikTok to engage with customers and build a stronger, more relevant brand in today’s fashion landscape. By listening to customer feedback and leveraging the authenticity of TikTok’s community, Abercrombie & Fitch has humanized its brand and better connected with its target audience.

"Over the past few years, we've been laser-focused on listening to our customers and TikTok has been the perfect platform for fostering that communication," Abercrombie Brands’ Senior Vice President and Head of Marketing Carey Collins Krug told Teen Vogue. "We watch the reviews and hauls of our products. We take notes of how people describe the quality and fit. There's an authenticity innate to TikTok and its entire community that has allowed us to humanize Abercrombie."

Additionally, Abercrombie & Fitch has integrated AI technology into its product design process, allowing it to quickly iterate and refine its offerings based on historical data and customer preferences. This strategic integration of technology has enabled Abercrombie & Fitch to stay ahead of the curve and continuously innovate in a rapidly evolving retail environment.

Samir Desai, the company's executive vice president and chief digital and technology officer, elaborated on this approach, stating, “We feed [the tech] historical images of products that have sold really well and use prompts to iterate and refine and base a new line off of that. It's driving inspiration, it's driving velocity and how quickly [the team] can produce product images.”

It’s important to acknowledge Abercrombie & Fitch's past challenges, including controversies surrounding its lack of plus-size options in 2013, which led to a boycott and accusations of discrimination. The company has since taken steps to address these issues and broaden its inclusivity, reflecting a commitment to adaptability and growth.

Abercrombie & Fitch’s resurgence serves as a testament to the enduring power of strategic vision, adaptability and innovation in the face of change. As the company continues to evolve and innovate, its trajectory highlights the importance of staying agile and responsive to shifting consumer preferences and technological advancements in the retail industry.

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Kroger - >>> 4 Warren Buffett Stocks to Buy After Berkshire Hathaway’s Latest 13F Filing

Plus, the stocks Berkshire bought and sold last quarter.


Morningstar

by Susan Dziubinski

Feb 14, 2024


https://www.morningstar.com/stocks/4-warren-buffett-stocks-buy-after-berkshire-hathaways-latest-13f-filing


Kroger -

Morningstar Rating: 4 stars
Morningstar Economic Moat Rating: Narrow
Morningstar Capital Allocation Rating: Exemplary
Industry: Grocery Stores

Berkshire Hathaway owns about 7% of Kroger’s outstanding shares. Kroger and rival Albertsons have announced merger plans, though regulatory hurdles persist. We think Kroger has carved out a narrow economic moat and is run by a management team that has done an exemplary job of allocating capital. Kroger stock trades 14% below our $53 fair value estimate.

Here’s Morningstar senior analyst Dan Wasiolek’s take on Kroger’s business strategy and outlook:

Of the traditional grocers, we believe Kroger’s scale, partnerships, private-label fare, and data capabilities uniquely position the company to defend its returns against competition that should intensify as Amazon, mass merchandisers, and hard discounters continue to price aggressively to boost volume. We contend that Kroger still benefits from enduring intangible assets and cost advantages, even if its acquisition of Albertsons is derailed by regulators.

Grocers use price as a primary lever to drive traffic, necessitating efficiency and cost leverage to deliver returns. We expect this environment to endure as the industry changes, with an omnichannel experience likely to prevail as customers use a combination of deliver-to-home, click-and-collect, and in-store shopping, particularly since most American consumers drive past grocers on their commutes and home delivery can be inconvenient for buyers with uncertain schedules (although the COVID-19 pandemic likely accelerated delivery adoption in the long term). In physical retail, we anticipate shoppers will choose sellers based on convenience, price, and breadth of assortment, demanding high value as well as a compelling store environment.

Kroger should be able to capitalize on the changing landscape. We maintain that its local market scale allows it to derive cost leverage that fuels competitive pricing and the investments needed to build on its presence in the emerging channels. Its progress should be accelerated by partnerships (with Ocado, Walgreens, Microsoft, and others) that we do not believe are available to smaller rivals because they cannot deliver the same value to counterparts.

Nearly all Kroger's transactions are derived from its loyalty database, providing consumer insights that should play a large role in its digital transformation, fueling promotional efforts and customer engagement while informing assortment and providing salable insights as nongrocery revenue streams. We expect data to play a key role in efforts to drive traffic, efficiency, and conversion that few can match.

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>>> Murphy USA Inc. (MUSA) Reports Solid Q4 and Full Year 2023 Financial Results


GuruFocus Research

February 7, 2024


https://finance.yahoo.com/news/murphy-usa-inc-musa-reports-215915108.html


Net Income: Q4 net income increased to $150.0 million, with full-year net income at $556.8 million.

Fuel Contribution: Total fuel contribution for Q4 was 32.5 cents per gallon, with a yearly average of 31.4 cents per gallon.

Retail Gallons: Stable at 1.2 billion in Q4, with a slight decline in same store sales.

Merchandise Contribution: Grew by 4.6% in Q4 to $197.7 million, with a full-year increase of 4.7%.

Share Repurchase: Approximately 442.2 thousand shares repurchased in Q4; over 1 million shares in full year 2023.

Store Openings: 10 new stores in Q4, bringing the total count to 1,733 by year-end.

Dividends: Quarterly cash dividend paid at $0.41 per share, with an annual increase of 11.7%.


On February 7, 2024, Murphy USA Inc (NYSE:MUSA) released its 8-K filing, announcing its financial results for the fourth quarter and full year ended December 31, 2023. The company, a prominent retailer of gasoline products and convenience merchandise, operates a network of retail stations across the United States, with a significant number of stores adjacent to Walmart locations.

Fiscal Performance Highlights

Murphy USA Inc (NYSE:MUSA) reported a net income of $150.0 million, or $7.00 per diluted share, for the fourth quarter of 2023, an increase from the $117.7 million, or $5.21 per diluted share, recorded in the same quarter of the previous year. For the full year, net income was $556.8 million, or $25.49 per diluted share, compared to $672.9 million, or $28.10 per diluted share, in 2022. The company's total fuel contribution for the fourth quarter was 32.5 cents per gallon (cpg), up from 30.6 cpg in the prior year's quarter. However, the full-year fuel contribution averaged 31.4 cpg, down from 34.3 cpg in 2022.

Despite a challenging environment, Murphy USA maintained stable retail gallon sales at 1.2 billion for both the fourth quarter and the full year, matching the previous year's figures. However, same store sales (SSS) volumes saw a slight decline of 2.0% for the quarter and 1.8% for the year. The merchandise contribution for the fourth quarter increased by 4.6% to $197.7 million, with unit margins holding steady at 19.4%, reflecting a consistent performance in merchandise sales.

Strategic and Operational Developments

President and CEO Andrew Clyde highlighted the company's robust operational performance and strategic initiatives, stating,

2023 financial results and operational performance are a testament to the strong foundations we have built at Murphy USA over the last decade, successfully executing against our strategy, and widening our advantage in the marketplace."

Clyde emphasized the company's focus on new store growth, continuous improvement, and investment in people, technology, and innovation to drive in-store performance.

The company continued its share repurchase program, buying back approximately 442.2 thousand common shares for $162.0 million in the fourth quarter, and over 1.0 million shares for a total of $336.2 million for the full year. This reflects Murphy USA's commitment to returning value to shareholders.

Murphy USA also expanded its store portfolio, opening 10 new stores in the fourth quarter, resulting in a net year-end total of 1,733 stores. The company's capital allocation strategy remains focused on growth, with a strong and agile balance sheet supporting these efforts.

Financial Position and Outlook

As of December 31, 2023, Murphy USA reported cash and cash equivalents of $117.8 million, with total marketable securities of $11.5 million. The company's long-term debt stood at $1,784.7 million. The effective income tax rate for the fourth quarter was 23.6%, slightly up from 22.3% in the previous year's quarter.

Looking ahead, Murphy USA provided guidance for 2024, anticipating sustained growth in new store additions and investments in raze-and-rebuild sites. The company expects to maintain market share gains and foresees modest growth in store operating expenses per site, excluding credit card fees and rent. SG&A costs are projected to reflect continued investments in productivity initiatives, with an effective tax rate expected to be in the range of 24% to 26%.

For detailed financial tables and further discussion of Murphy USA's financial performance, including reconciliations of non-GAAP financial measures, please refer to the full 8-K filing.

Investors and stakeholders are invited to join the earnings call on February 8, 2024, to discuss the Q4 and full-year results. The call will provide an opportunity to gain deeper insights into the company's financial health and strategic direction.

Murphy USA Inc (NYSE:MUSA) remains focused on delivering shareholder value and is poised to leverage its strong Q4 performance and strategic initiatives to drive continued success in 2024.

Explore the complete 8-K earnings release (here) from Murphy USA Inc for further details.

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>>> Murphy USA Inc. (MUSA) engages in marketing of retail motor fuel products and convenience merchandise. The company operates retail stores under the Murphy USA, Murphy Express, and QuickChek brands. It operates retail gasoline stores principally in the Southeast, Southwest, and Midwest United States. The company was founded in 1996 and is headquartered in El Dorado, Arkansas.

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https://finance.yahoo.com/quote/MUSA/profile?p=MUSA



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>>> Costco to Pay Special Dividend of $15 Per Share: What You Need to Know


Motley Fool

by Daniel Sparks

December 14, 2023


We knew it was coming. We just didn't know when.

Costco (NASDAQ: COST) Chief Financial Officer Richard Galanti's rhetoric in recent earnings calls, when asked about whether the company would pay out another special dividend, has been that it's "probably a question of when, not if." The day has finally come.

Costco announced on Thursday it would pay a special cash dividend of $15 per share on Jan. 12, 2024 to shareholders of record as of the close of business on Dec. 28. This, of course, is on top of the quarterly dividend the company has already committed to.

The news of Costco's special dividend builds on an upbeat quarterly financial update released on Thursday. The report, which featured double-digit year-over-year earnings-per-share growth, highlighted the membership-based wholesale warehouse's resilience, even in a challenging macroeconomic environment.

Costco's dividend history

This will be Costco's fifth-ever special dividend. Previous special dividends were paid in 2012, 2015, 2017, and 2020 in the amounts of $7, $5, $7, and $10, respectively. This makes the company's 2024 special dividend of $15 its largest, by far.

To fund this dividend, Costco will pay an aggregate amount of $6.7 billion to shareholders.

Unlike many of its peers, Costco operates its business with a significant net cash position. This means its interest expense is extremely low, which helps the company keep its cost structure low to pass those savings onto members. At the end of its just-reported fiscal first quarter, Costco had about $7 billion of debt and nearly $18 billion of cash, cash equivalents, and short-term investments. So there's plenty of cash to spare.

Costco also notably pays a meaningful, growing quarterly dividend of $1.02. The company's most recent hike came in at a double-digit rate of 12%.

Support for a high stock price

A robust special dividend comes at a good time for shareholders. The stock has soared nearly 40% year to date, giving the stock a somewhat pricey valuation. The stock's price-to-earnings ratio is now in the forties. Fortunately, a special dividend and double-digit growth in earnings per share help support this high valuation.

Speaking of Costco's earnings, the company's fiscal first-quarter revenue and earnings per share both came in higher than analysts' estimates. Total revenue of $57.8 billion was up from $54.4 billion in the year-ago quarter, beating analysts' average forecast for revenue of $57.7 billion. Earnings per share of $3.58 (up 17% year over year) was also higher than a consensus estimate of $3.42.

Sales in the quarter were helped by growing demand for the company's groceries and essentials. But strong growth in membership fees also helped. Membership fee revenue rose more than 8%, outpacing net sales growth by 2 percentage points.

Altogether, Costco's results offer a strong reminder of why the company's shares are worth a high premium. This is especially true ahead of a likely membership fee increase in the near future.

Just as management has hinted at a special dividend, it's also hinted that a membership fee increase is up for consideration. Indeed, it wouldn't be surprising to see Costco raise the prices of its memberships in 2024.

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>>> Costco hotdogs, rotisserie chicken, self-checkout: What changed under exiting CEO Jelinek


by Bailey Schulz

USA TODAY

October 19, 2023


https://finance.yahoo.com/news/costco-ceo-craig-jelinek-step-164328197.html


After about a dozen years at the helm, Costco's Craig Jelinek is stepping down from his role as chief executive.

The transition is set to take place on Jan. 1, with President and Chief Operating Officer Ron Vachris taking over as CEO. Jelinek will remain at Costco through April 2024 in an advisory role and will stand for reelection on the board in January, according to a statement from the company.

Jelinek became CEO in January 2012 and has continued his predecessor's focus on keeping prices low and employees happy within the country’s third-largest retailer.

But not everything has remained the same. Here are some of the changes ushered in during Jelinek’s time as CEO:

Revenue growth and more warehouses

When Jelinek’s succession was announced, Costco had 592 warehouses in operation, 429 of which were in the United States. The company’s footprint has gone up 45% since then, with 861 warehouses – including 591 in the U.S. – operating today.

Jelinek has also helped increase Costco's international presence, opening warehouses in China, Spain, France, Iceland, New Zealand and Sweden.

The company's share price has surged under Jelinek, from about $80 per share in early 2012 to over $550 today. Its share price has gone up over 25% so far this year, outperforming the benchmark S&P 500.

And revenue has more than doubled, from $99 billion in 2012 to $242.3 billion in the latest fiscal year.

Costco removed self-checkouts … then brought them back

Jelinek told Bloomberg Businessweek in 2013 that the company would be eliminating self-checkout in stores after experimenting with the technology, noting that he thought employees did the job better.

“They are great for low-volume warehouses, but we don’t want to be in the low-volume warehouse business,” he said at the time.

Costco reversed its decision in 2019 and is now cracking down on checking membership cards at self-checkout lanes to prevent unauthorized card-sharing.

A new poultry complex to keep rotisserie chicken prices down

In 2019, Costco opened a $450 million poultry complex in Fremont, Nebraska, to help keep its rotisserie chicken prices at $4.99.

In a 2019 earnings call, Chief Financial Officer Richard Galanti said the plant can process about 2 million birds a week. The plant was estimated to save Costco about 35 cents per bird in 2015, or about $35 million annually.

Membership prices went up

Costco membership fees went up from $55 to $60 in 2017 under Jelinek, the first price hike since a $5 increase in 2011.

Membership prices are expected to jump again soon, with Galanti noting in an earnings call that “it’s a question of when, not if.” He noted that membership hikes typically take place every five to six years.

How much is Costco's annual fee? Costco membership price increase 'a question of when, not if,' CFO says

Some ? but not all ? food court prices went up

Certain food court items, including the chicken bake and soda, have seen price hikes in recent months, according to Insider.

But there is one item on the menu with a price that has remained unchanged since 1985: the Costco hotdog.

During an earnings call last year, Galanti said other parts of the business should help the company keep its hotdog prices stable “forever.” And when Jelinek was asked on CNBC last year if he would raise the food court item’s price from $1.50, he had a simple answer: “No.”

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>>> Why Casey's General Stores Stock Was Up This Week


Motley Fool

by John Ballard

Sep 15, 2023


https://www.fool.com/investing/2023/09/15/why-caseys-general-stores-stock-was-up-this-week/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


KEY POINTS

Casey’s latest earnings results show a resilient business to the macroeconomic challenges affecting other retailers.

Its focus on the rural market is working to its advantage.

The stock is still reasonably valued after the post-earnings jump

This convenience store continues to shine in a challenging retail environment.


What happened

Week to date, shares of Casey's General Stores (CASY) were up 15.8% through Thursday's market close, according to data provided by S&P Global Market Intelligence.

The company delivered a solid round of financial results for the fiscal first quarter ending July, with same-store sales up 5.4% and earnings per share increasing by 11% year over year.

The balanced top- and bottom-line growth in a challenging retail environment certainly got Wall Street's attention. The stock hit a new all-time high but is still reasonably valued.

So what

Casey's saw good sales performance across several categories. It highlighted the strong sales of its new thin crust pizza, in addition to strong sales of whole pizza pies. Sales of beverages, both alcoholic and nonalcoholic, performed well, too.

The focus on rural locations and on high-margin food and private-label offerings appears to be working to Casey's advantage, with other retailers reporting mixed results this year. Casey's hasn't been immune to the macroeconomic headwinds, as it's not growing as fast as it was a few years ago, but it's handling the challenges much better than others right now. The stock has more than doubled over the last five years, and it could deliver similar returns over the next five years.

Now what

Management is working to keep operating expenses down, which has led to improving operating margin and stellar earnings performance lately. It's also good at executing acquisitions that profitably expand the store base without diluting the company's return on capital. It currently has 125 stores under agreement to acquire.

The stock still trades within its historical price-to-earnings ratio range. This is a well-managed convenience store chain that should continue to deliver returns to shareholders consistent with the performance of the underlying business.

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>>> Casey's General Stores -- Another attractive business with a lot of room for growth is Casey's General Stores (CASY). This is a growing chain of small convenience stores scattered across the Midwest. The company's roots date back to 1968, which shows this is a time-tested retail store that has seen several recessions in the economy but keeps on growing.


https://www.fool.com/investing/2023/10/03/2-growth-stocks-buy-now-less-500/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


Casey's grew revenue and earnings at an annualized rate of 8% and 16%, respectively, over the last decade. That was enough to push the stock up 273% over the last 10 years, and the stock recently hit new highs following another strong earnings report.

Further growth in same-store sales and controlled operating expenses drove an 11% increase in earnings per share for the fiscal quarter ending July 31. These are relatively strong numbers for the retail industry right now.

Casey's footprint in rural areas works to its advantage. Many people will stop for gas and tend to make impulse purchases of snacks and beverages. The number of fuel gallons sold, a key performance metric the company reports, notched a small increase over the year-ago quarter. But Casey's experienced strong demand in prepared food, where the company earns a healthy profit. Casey's is seeing strong sales for its made-from-scratch pizza, which it's known for, in addition to snacks, candy, and beverages.

While Casey's already has a large footprint of over 2,500 stores, it operates in only 16 states, so there are potentially thousands of stores it could open across the U.S. in the coming decades.

The stock historically trades at an average P/E between 20 to 25, which means the share price just continues to climb along with the growth of the business. Casey's should continue to grow earnings at double-digit rates as it opens more stores and grows same-store sales. That should spell market-beating returns for long-term investors.

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Casey's General Stores - >>> Fifth-largest U.S. Pizza Chain Casey’s Is Now The Official Pizza and Beer HeadquartersTM


Business Wire

October 9, 2023


https://finance.yahoo.com/news/fifth-largest-u-pizza-chain-130000574.html


Casey’s is also the fourth-largest holder of liquor licenses in the U.S., making it the ideal place to get handmade pizza and ice-cold beer

ANKENY, Iowa, October 09, 2023--(BUSINESS WIRE)--Casey’s (Nasdaq: CASY) and pizza fans alike already knew it, but now there is a trademark to prove it. Announced today, Casey’s is The Official Pizza and Beer HeadquartersTM. As the fifth-largest pizza chain and third-largest convenience store in the U.S., Casey’s is a unique one-stop shop for anyone looking for handmade, delicious pizza and refreshing, ice-cold beer.

According to a recent Casey’s survey, pizza and beer is one of the best food and beverage pairings out there. Here’s why:

Half of adults ages 21 and older and two-thirds of millennials say there’s no better pairing than pizza and an ice-cold beer.

Nearly 1 in 2 adults ages 21 and older would like to order a pizza from a place where they can also get beer. And as The Official Pizza and Beer Headquarters, Casey’s answers this call.

This popular pairing is also perfect for a party, with nearly two-thirds of adults ages 21 and older noting that pizza and beer are the easiest combo to please a crowd. And 55% of adults ages 21 and older and 72% of millennials say that having pizza and beer makes them the favorite host.

"One thing that truly separates Casey’s is the convenience of ordering craveable, handmade pizza from a place where you can also buy fuel, groceries and, of course, beer. We are The Official Pizza and Beer Headquarters because we are the only leading pizza chain in the country where you can also purchase a wide variety of beer, wine and liquor options," said Tom Brennan, Chief Merchandising Officer at Casey’s. "Whether you're watching the big game, headed to a get-together or having dinner with your crew, pizza and beer is the perfect pairing and there’s no easier place to get both than at Casey’s."

The trademark filed with the U.S. Patent and Trademark Office also comes at the perfect time for those looking to celebrate International Beer and Pizza Day (Oct. 9) or National Pizza Month (October). Casey’s guests can find special deals on their favorite pizzas all month. From now through Oct. 25, all Casey’s guests can get $9.99 large single-topping pizzas when they order two.

In addition, Casey’s Rewards members in participating states can get $5 off their next pizza when purchasing a 12-pack of certain beers. Casey’s Rewards members also will earn double points on every whole-pie pizza purchase starting in October. That’s 20 points per $1 spent – any crust and any size. Guests can choose to use these extra points at any time for fuel discounts, school donations or even more pizza. Order online or in the app.

Must be 21 years or older and present valid ID to purchase alcohol. Please drink responsibly.

About Casey’s

Casey’s is a Fortune 500 company (Nasdaq: CASY) operating over 2,500 convenience stores. Founded more than 50 years ago, the company has grown to become the third-largest convenience store retailer and the fifth-largest pizza chain in the United States. Casey’s provides freshly prepared foods, quality fuel and friendly service at its locations. Guests can enjoy pizza, donuts, other assorted bakery items, and a wide selection of beverages and snacks. Learn more and order online at www.caseys.com, or in the mobile app.

About the Survey

Casey’s and FleishmanHillard commissioned Atomik Research to conduct an online survey of 2,003 adults across the United States. The sample consists of 1,954 adults ages 21 and older. The margin of error for the overall sample is +/- 2 percentage points with a confidence level of 95%. Fieldwork took place between Aug. 28 and Aug. 30, 2023. Atomik Research is an independent, creative market research agency.

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Costco - >>> Is This the Single Biggest Bear Argument for Costco Stock?


Motley Fool

By Neil Patel

Oct 6, 2023


https://www.fool.com/investing/2023/10/06/is-this-the-single-biggest-bear-argument-costco/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


KEY POINTS

The mammoth retailer's historical financial performance has been stellar.

Its stock has richly rewarded investors, but it trades at an expensive multiple today.

Investors have to ask if future growth prospects justify the stock’s valuation.


It's hard to find anything wrong with this outstanding business, but investors have to be mindful of one key factor.

Many investors would agree that Costco Wholesale (COST) is a wonderful business. It has an impressive track record of steadily growing revenue and earnings, possesses a cost advantage in the retail sector, and operates a successful membership model that drives customer loyalty.

These favorable traits have led to tremendous returns. In the past decade, its shares are up 395%, beating the Nasdaq Composite by a sizable margin.

However, investors would probably be more well-informed in their understanding of the business if they also knew about Costco's biggest bear case. Let's take a closer look at this top retail stock and what investors should keep in mind.

A steep valuation

A stock that has performed as well as Costco has in the last 10 years, and even more so in recent years, is something every investor seeks for their portfolio. But right now, the shares are extremely expensive.

As of this writing, the stock trades at a trailing price-to-earnings (P/E) ratio of 40.1. That's a premium to Costco's five-year historical average of 37.4, which indicates to me that there is little margin of safety if someone were to go out and buy shares right now. In other words, the optimism and favorable perspective about this business seem to be fully priced in (and then some).

It would be accurate to say that most everyone knows how great of a business this is. As I alluded to earlier, Costco has done a wonderful job at growing its revenue and income at healthy rates in the past. Sales and diluted earnings per share (EPS) have risen at compound annual rates of 8.7% and 11.8%, respectively, in the past 10 fiscal years . And this has translated to strong stock price performance.

The business benefits from having a cost advantage, which I believe is the key source of its economic moat. Due to its tremendous scale, as demonstrated by fiscal 2023 net sales of $238 billion, Costco is the world's third-biggest retailer. This means it can flex its bargaining power over its suppliers, obtaining favorable unit costs. And these savings get passed to shoppers in the form of low prices.

What's more, Costco is able to drive customer loyalty thanks to its membership business model. Having access to low prices and high-quality merchandise is worth the $60 annual fee for the basic membership option. Customers love this, as shown by the worldwide renewal rate of 90.4%. "We ended [the] fourth quarter with 71.0 million paid household members, up 7.9% versus a year ago," CFO Richard Galanti said on the fiscal Q4 2023 earnings call.

Growth outlook

It's kind of funny that a business which sells merchandise at the lowest prices around has a very expensive stock. Consumers have long been in love with what Costco offers, so it's not a surprise that investors have been drawn to the company's shares.

But Costco's P/E ratio is really only justified if the company possesses sizable growth prospects over the next five years. This is a mature business these days, so it's likely not worth the premium valuation.

To be fair, the management team is still focused on opening more warehouses -- 23 net new locations in the last fiscal year to be exact -- which is a primary driver of the expansion strategy. Costco now has 861 warehouses across the globe. But executives do think over the next 10 years the business could open 150 more stores in the U.S. alone, adding to its 591 today. That domestic outlook, coupled with international growth opportunities, particularly in China, is definitely encouraging.

Wall Street consensus forecasts call for 5.8% revenue growth and 10.5% gains in diluted EPS annually over the next five fiscal years. These might seem like strong estimates on the surface. But these figures indicate that shares are trading at 24.4 times fiscal 2028 EPS projections of $23.30. To me, that means the stock is clearly expensive right now, making the prospect of market-beating returns much more difficult to achieve from this point forward.

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>>> Costco Wholesale (COST) -- a membership-only discount retailer with a market capitalization of nearly $250 billion, pays a quarterly dividend of $1.02 per share. The annual yield of 0.73% isn't impressive on the surface, but the company has raised its dividend annually since 2004.


https://www.fool.com/investing/2023/09/17/3-top-dividend-stocks-to-buy-now/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


It also pays a special cash dividend roughly every three years. Given that pattern, shareholders can reasonably anticipate another special dividend in the near future since the last one was paid in December 2020 at $10 per share.

With Costco's business model, monitoring membership growth is an essential measure of health and future growth with membership price increases. In its last 12 reported months, the company grew its number of cardholders from 116.6 million to 124.7 million, resulting in a roughly 7% increase.

Costco's annual membership fees generate approximately $4 billion in high-margin revenue. The company's historical pattern indicates it raises these fees about every five or so years, and the most recent change occurred in June 2017, so it stands to reason that an increase in fees is likely on the horizon, which would boost membership revenue even more.

If there is a downside to investing in Costco, it begins and ends with its valuation. Using the standard valuation metric for mature companies of price-to-earnings (P/E) ratio, the stock trades at a P/E of 41.4, significantly higher than competitors Target and Walmart at a P/E of 16.8 and 31.6, respectively. Costco's five-year average P/E is 37.4, meaning the stock is currently trading at an even higher valuation than usual.

Despite maintaining a consistently high valuation, Costco's stock has demonstrated its status as a long-term winner, delivering a total return of 146% over the last five years. When combined with an impressive balance sheet with $7.2 billion more in cash than debt, Costco emerges as an essential holding for long-term dividend-focused investors.

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>>> Winmark -- While many consumers might be unaware of small-cap stock Winmark (WINA), they are probably aware of its franchise-based retail companies that specialize in buying and selling secondhand goods: Music Go Round, Once Upon a Child, Plato's Closet, Play It Again Sports, and Style Encore.


https://www.fool.com/investing/2023/09/17/3-top-dividend-stocks-to-buy-now/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


Winmark's stock has demonstrated remarkable performance, surging 53% year to date, and even more impressively, delivering a total return of 145% over the past five years.

Like Costco, Winmark has a relatively low annual dividend yield and frequently pays a special dividend. Its yield is 0.9%, and it has paid a special dividend each of the last three years at an average of $4.97 per share. With the announcement of its special cash dividend typically in October, it is possible another one could be soon.

As a franchise business, Winmark is incentivized to expand its network because its revenue is primarily derived from franchise fees and royalties. Prospective franchisees must make an initial franchise payment of approximately $25,000 in the United States and contribute 4% to 5% of their weekly gross sales. CEO Brett Heffes believes there are 2,800 open territories for franchises, with only 1,303 locations as of July 1, 2023.

If there is a negative for Winmark, the recent stock run-up has made its valuation expensive, with a current P/E of 32.7. For comparison, Winmark averaged a P/E of 23.2 over the past five years. Nonetheless, with record revenue of $83.2 million and near-record net income of $39.9 million over the trailing 12 months, the market might finally be taking notice of the resale company valued at a market capitalization of $1.3 billion.

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Tractor Supply - >>> 2 Fantastic Reasons Tractor Supply Should Continue Harvesting Growth for Investors


Motley Fool

By Will Healy

Sep 22, 2023


https://www.fool.com/investing/2023/09/22/2-fantastic-reasons-tractor-supply-harvesting/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


KEY POINTS

Shares of the rural lifestyle retailer have risen by nearly 62,000% since 1994.

More people are moving to rural America, increasing its addressable market.

The rural lifestyle retailer is not done growing despite a 49-state footprint.


Tractor Supply (TSCO) is arguably an easy stock to write off for most investors. The company's stores are away from population centers, so it is not a fixture in areas where most Americans live.

Moreover, it has built approximately 2,200 stores spread across 49 states and has shown no apparent inclination to expand internationally. Thus, you might assume it is nearing market saturation.

Nonetheless, Tractor Supply has harvested massive returns for investors, and as it continues forward, its growth should continue for the following reasons.

1. Plenty of room for store growth

Tractor Supply has prospered by carving out a niche among rural lifestyle enthusiasts. Its primary demographic consists of the so-called "hobby farmers" who live on a few acres and engage in smaller-scale agriculture. This approach has taken the stock an astounding 61,500% higher since its initial public offering in 1994.

And the company has not hesitated to acquire retailers in related areas, like the separate Petsense chain for companion animals. It has also bought out other chains like Orscheln Farm & Home, which will become additional Tractor Supply locations. Hence, it remains expansion-minded through a mix of sticking to its core concept and serving the pet market.

Rural America has also begun to grow in population. More employees and contractors work remotely, and the pandemic prompted many former city dwellers to move to the countryside, a trend expanding Tractor Supply's addressable market.

2. Strong financials (relatively speaking)

Tractor Supply's financials have shown some resilience. Despite slow comparable-store sales growth in the first quarter, its net sales in the first half of 2023 were $7.5 billion, 8% more than in the same period last year. Net income was $604 million during the first two quarters of the year, though rising operating expenses meant its profits only grew 3% from year-ago levels.

Due to concerns about falling customer spending, Tractor Supply reduced its 2023 revenue estimate to $14.85 billion at the midpoint, down from $15.15 billion. It also adjusted its net income forecast to a mid-range estimate of $1.135 billion, down from $1.15 billion.

The stock has fallen slightly this year, but that did not stop Tractor Supply from raising its dividend by 12% in February, amounting to a near doubling of the payout in two years. With the dividend now at $4.12 per share annually, new shareholders will earn a 1.9% dividend yield, well above the S&P 500's 1.5% payout.

The retailer has hiked its payout every year since introducing it in 2010, raising its profile as a dividend stock, especially with the size of the aforementioned increases. So investors might want to buy it despite its price-to-earnings ratio of 21, a moderate level considering the history of the stock.

Consider Tractor Supply

Despite an extensive 49-state footprint and some recent sluggishness, Tractor Supply is not done returning bumper crops of growth and earnings. The company has many avenues related to its core business that it can take advantage of, especially with a rising rural population.

Even at a moderate valuation, its history of massive growth and a fast-growing dividend should help boost the retail stock. If more urban investors take notice of Tractor Supply's success in the countryside, it could reap a bountiful harvest.

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>>> Tractor Supply -- Paying a 1.8% dividend, rural lifestyle retailer Tractor Supply has the largest yield of this group. Over the last five years, Tractor Supply has seen annualized dividend growth of 28% and maintained a payout ratio of 39%. A company's payout ratio measures the percentage of net income used to pay its dividends each year -- highlighting that Tractor Supply has ample room for increases, even if net income doesn't grow.


https://www.fool.com/investing/2023/09/07/4-top-dividend-payers-of-the-sp-500/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


However, the company has increased earnings per share (EPS) by 19% annually since 2013, so it isn't likely the company's profits will stagnate for an extended period. Led by a Neighbor's Rewards Club with over 31 million members -- a figure that grew by 19% from last year -- Tractor Supply's sales are steadier than one might think.

Even as consumer spending tightened in 2023, leading to a drop in seasonal and big-ticket purchases, the company eked out same-store sales growth of 3% thanks to its consumable, usable, and edible (CUE) sales rising by over 10%. These repeat sales help Tractor Supply generate consistent profitability, recording a return on invested capital (ROIC) of 34%. This ROIC places the company in the top decile of the S&P 500 and is an excellent sign for interested investors as stocks with higher ROICs outperform their less-profitable peers.

With a price-to-earnings (P/E) ratio of 22, Tractor Supply trades at a slight discount to its historical averages, making it an elite dividend growth stock to buy and hold forever.

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Floor & Decor (FND) - >>> A niche, Buffett-backed home improvement retailer


https://www.fool.com/investing/2023/04/04/build-wealth-buy-these-growth-stocks/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


Berkshire Hathaway's chairman and chief executive officer, Warren Buffett, loves businesses that possess an edge over their competitors. This is probably why his holding company owns a 4.5% position in the specialty home improvement retailer Floor & Decor (FND) worth almost $500 million.

Floor & Decor may not have the name recognition of its larger, more generalized counterparts like Home Depot and Lowe's. But nobody knows the hard-surface flooring space better than the under-the-radar retailer. With the average store coming in at around 79,000 square feet and offering about 4,400 tile, wood, laminate, vinyl, and natural stone flooring products, Floor & Decor can't be beat on product selection. And since the company sources its products straight from manufacturers, it passes savings on to customers with reasonable prices.

As you'd expect for a smaller company, Floor & Decor has yet to peak as a business. The company currently has fewer than 200 stores, which is far below its long-term target of 500 stores. Analysts believe that adjusted diluted EPS will increase at a rate of 13.8% annually through the next five years. That's drastically superior to the home improvement retail industry average earnings growth forecast of 4.1%.

Topping it off, the stock looks to be a bargain for its quality. Floor & Decor's forward P/E ratio of 28.8 is cheap compared to the home improvement retail industry average forward P/E ratio of 16.5. This is why I expect the stock to keep generating double-digit annual total returns for shareholders for at least the medium term.

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Ulta Beauty, Inc. (NASDAQ:ULTA) - >>> Number of Hedge Fund Holders: 43


https://www.insidermonkey.com/blog/5-best-beauty-stocks-to-buy-now-3-1137038/


Beauty products and salon company Ulta Beauty, Inc. (NASDAQ:ULTA) shares are gaining ground after the company crushed analyst estimates for the fourth quarter. After the quarterly results, Canaccord Genuity analyst Susan Anderson gave bullish comments on Ulta Beauty, Inc. (NASDAQ:ULTA) and said the company is expected to continue its growth momentum as “management looks to open additional doors across the US, expands in Targets, and increases its penetration of prestige and luxury products.”

A total of 43 hedge funds tracked by Insider Monkey had stakes in Ulta Beauty, Inc. (NASDAQ:ULTA). The net worth of these stakes was $1.5 billion. The biggest stakeholder of Ulta Beauty, Inc. (NASDAQ:ULTA) was D E Shaw which had a $204 million stake.

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>>> Lowe's Companies, Inc. (NYSE:LOW) - Number of Hedge Fund Holders: 68


https://finance.yahoo.com/news/14-cheap-quarterly-dividend-stocks-161933738.html


Dividend Yield as of 3/29: 2.19%

Lowe's Companies, Inc. (NYSE:LOW) is another leading home improvement retailer that is trading for a fairly low valuation given the quality of its business and its growth potential in the long term. As of March 30, Lowe's Companies, Inc. (NYSE:LOW) has a forward P/E of 13.03, making the stock potentially attractive in the long term if demand for the home improvement retailer's products grows again. In Q3 of 2022, Lowe's Companies, Inc. (NYSE:LOW) was one of the stocks with the biggest buybacks. For those of you interested, check out 10 Stocks with the Biggest Buybacks for stocks with the biggest buybacks in Q3 of 2022.

68 hedge funds in our database owned shares of Lowe's Companies, Inc. (NYSE:LOW) at the end of Q4, ranking the stock #6 on our list of 14 Cheap Quarterly Dividend Stocks to Buy.

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>>> The Home Depot, Inc. (NYSE:HD) - Number of Hedge Fund Holders: 62


https://finance.yahoo.com/news/14-cheap-quarterly-dividend-stocks-161933738.html


Dividend Yield as of 3/29: 2.95%

The Home Depot, Inc. (NYSE:HD) shares are down over 10.29% year to date and have a forward P/E ratio of 16.85 as of March 29 given the sluggish growth expected in the home improvement industry this year. As a result of the sluggishness, The Home Depot, Inc. (NYSE:HD) sees sales growth and comparable sales growth for fiscal 2023 to be approximately flat compared to fiscal 2022. Despite the headwinds, The Home Depot, Inc. (NYSE:HD)'s board of directors in February 2023 authorized a 10% increase in the quarterly dividend to $2.09 per share, which equates to an annual dividend of $8.36 per share.

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>>> Ulta Beauty COO on record-breaking sales: ‘The whole store is hot’


Yahoo Finance

by Edwin Roman

April 9, 2023


https://finance.yahoo.com/news/ulta-beauty-coo-on-record-breaking-sales-the-whole-store-is-hot-142511750.html


Inflation and slowing consumer spending on discretionary items haven't put the brakes on Ulta's (ULTA) momentum in the beauty category.

In its fiscal fourth-quarter earnings last month, the beauty retailer reported record annual revenue in 2022 that surpassed $10 billion for the first time in its 33-year history while its customer loyalty program reached an impressive 40.2 million members.

"The whole store is hot," Ulta Beauty COO Kecia Steelman told Yahoo Finance's Brian Sozzi at the 2023 Shoptalk Conference (video above). "But I would say one of the categories that we're really seeing that's coming through COVID that's really stuck is wellness. ... So we're seeing wellness stick, and we're also seeing [consumers] really lean in a little bit more to cosmetics, which is great."

According to Susan Anderson, analyst at Canaccord Genuity, Ulta's strength can be attributed to the strength of the category overall as well as factors specific to the retailer, such as its rewards program, omnichannel presence, and range of products and services across mass and prestige cosmetics, skincare, and wellness.

The beauty category has "continued to be strong into this year," Anderson told Yahoo Finance Live following her bullish Buy rating on Ulta stock. "I think that's only going to benefit Ulta."

"We also see them as a share gainer despite the higher growth category," added Anderson, who has a $622 price target on the stock. "We see them taking share from department stores, particularly as they roll out their prestige business further and then also add luxury such as Dior to their lineup of brands that they sell in the store."

Even as Ulta makes a push into more luxury segments, Steelman noted that the retailer is still attracting a broad range of consumers.

"What we're really pleased that we see is that the consumer across all income sectors is spending at a great pace," the COO said. "There's not one income sector that's outperforming another. So it's very consistent across the spectrum, and I think part of that is because we do offer everything in one place across all price points."

Ulta Beauty's momentum has given its collaborator Target (TGT) reason to celebrate as it saw a boost in makeup sales in the fourth quarter. The 350 Ulta shop-in-shops in Target stores have also incrementally boosted Ulta's sales and expanded its customer base.

"Target has over a hundred million customers in their loyalty program," Anderson said. "The next largest is probably Ulta. So it's definitely very large, but there's over a hundred million adult women in the U.S., so we think there's still opportunity for them to grow that loyalty program."

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>>> Tractor Supply: The leader in a quickly growing niche

https://www.fool.com/investing/2023/03/18/market-plunge-why-im-loading-up-on-these-2-stocks/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


Worker burnout following the COVID-19 pandemic has played a major factor in a mass migration away from urban areas and into rural areas over the last few years. A full two-thirds (66%) of Americans polled in a recent survey said that they would consider moving to a rural home or a subdivision if telecommuting is possible.

With over 2,200 stores in the U.S., Tractor Supply (TSCO 1.50%) has been and should continue to be the biggest beneficiary of this trend. This is because with more Americans embracing the rural lifestyle, the demand for the company's products has especially shot up in the last few years.

That explains why analysts believe the company's diluted EPS will grow by 10.1% annually through the next five years. Putting this into perspective, that is slightly above the specialty retail industry average earnings growth outlook of 9.4%.

Tractor Supply's 1.8% dividend yield is a bit higher than the S&P 500 index's yield. And considering that the company's dividend payout ratio will be less than 40% for the current fiscal year, this dividend has tons of room for future growth.

Tractor Supply's forward P/E ratio of 20 is much more than the specialty retail industry average forward P/E ratio of 16. But considering its massive tailwinds and remarkable track record of dividend growth, the stock is worthy of such a premium valuation.

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>>> Lowe's: A major player in a trillion-dollar industry


https://www.fool.com/investing/2023/03/18/market-plunge-why-im-loading-up-on-these-2-stocks/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


Operating as the second-biggest player in the $1 trillion home improvement retail industry, Lowe's Companies (LOW) has benefited from the emphasis placed on homeownership in North America. It's anticipated that soaring mortgage rates and elevated home values will result in a meaningful slowdown in the housing market.

But the good news for Lowe's is that demographics remain on its side; 72% of the nearly 70 million individuals living in the U.S. who are members of Generation Z intend to buy a home in less than six years. Beyond the near term, this bodes well for the company.

That's why analysts believe that Lowe's non-GAAP (generally accepted accounting principles) adjusted diluted earnings per share (EPS) will compound at 8.8% annually over the next five years. For context, that's about double the home improvement retail industry average earnings growth forecast of 4.4%.

Income investors will appreciate Lowe's 2.1% dividend yield, which is significantly more than the S&P 500 index's 1.7% yield. And because the company's dividend payout ratio was modest at less than 27% in its previous fiscal year, Lowe's appears poised to continue delivering strong dividend growth to shareholders in the years ahead.

The stock is trading at a forward price-to-earnings (P/E) ratio of 13.5, which is well below the home improvement retail industry average forward P/E ratio of 15.9. Given the company's superior growth prospects over industry peers, Lowe's arguably deserves a greater valuation multiple. That's probably why analysts have an average 12-month price target of $229, which represents a 15% upside from the current $199 share price.

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Tractor Supply - >>> This rural-lifestyle retailer is the best performer of these four stocks over the last five years, with a total return of around 280%.


https://www.fool.com/investing/2023/03/21/history-suggests-these-4-sp-500-stocks-could-soar/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


Its incredible fourth-quarter report saw sales, same-store sales, and EPS rise by 21%, 9%, and 26%, respectively, proving that its growth in 2021 was more than just a pandemic-aided bump. In fact, the company has reported 31 consecutive years of sales growth, with revenue doubling again in the last six years alone.

Tractor Supply has 28 million members in its Neighbor's Club rewards program, thanks in part to its 25% market share in animal feed. These recurring purchases are crucial for the company's customers, and they help fuel Tractor Supply's stellar ROIC of 37%.

The company's 8% net income margin -- robust for a retailer -- helps to fund its dividend (with a 1.6% yield) and a stock buyback program that has lowered its share count by 20% in the last decade.

On top of this, Tractor Supply trades at a reasonable P/E of 24, making its predictable growth very enticing for investors focused on the long term.

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Costco Wholesale - >>> Costco offers its 123 million cardholding members a slimmed-down assortment of products in bulk quantities, and it has built a wide moat with the outsize cost advantages it has developed.


https://www.fool.com/investing/2023/03/21/history-suggests-these-4-sp-500-stocks-could-soar/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


Thanks to the $4.3 billion in membership fees generated over the last year, the world's third-largest retailer has a ROIC of 22%, eighth best (out of 37 stocks) in the S&P 500's consumer defensive sector.

This cost-leadership positioning and strong profitability helped Costco more than triple the returns of the S&P 500 over the last five years.

Trading with a price-to-earnings (P/E) ratio of 36, the stock is not cheap. However, the company increased its dividend (currently yielding 0.7%) for 16 consecutive years -- yet still only uses 26% of its net income to fund these payments, leaving ample room for growth over the long term.

Furthermore, of Costco's 848 stores, only 117 are outside the U.S., Canada, and Mexico, leaving a long international growth runway ahead.

Why does this matter to investors? During its last earnings call, chief financial officer Richard Galanti explained that some of its foreign countries already generate higher profit margins than its U.S. stores. So investors would be wise to add to Costco over time as the company eyes new foreign markets.

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Home Depot - >>> Home improvement giant Home Depot (HD) needs no introduction, as its more than 2,000 stores are likely within a short drive of nearly anywhere in the country. While many consumers know Home Depot as the go-to location for all things home improvement, it also has a large business that caters to professionals hired for home improvement projects.


https://www.fool.com/investing/2023/03/15/3-growth-stocks-to-buy-now-if-interest-rates-remai/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


Home Depot is seeing strong performance from its Pro segment. In Q4 2022, Pro sales growth outpaced the do-it-yourself (DIY) segment, and backlogs for the Pro segment remained higher than their historical average. This performance was led by categories one might expect to see in a typical home renovation project like building materials, plumbing, and bath-related items.

Overall, Home Depot had a strong 2022. Revenue increased by 4% and comparable sales grew by about 3%. The company also announced a 10% increase to its dividend, which now yields 2.7%. It has also repurchased more than 1 billion of its shares over the last 10 years, reducing its shares outstanding by more than 30%.

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Tractor Supply - >>> In 2009, the worst year of the Great Recession, Tractor Supply's net sales increased by almost 7%. To be fair, the company's net-sales increase was the result of opening new stores -- it opened 76 that year. By contrast, same-store sales (a measurement of sales at existing locations) fell 1.1%. But that's actually still quite resilient during an economic downturn.


https://www.fool.com/investing/2023/02/23/2-recession-proof-growth-stocks-im-loving-now/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


In my opinion, there's a simple explanation for Tractor Supply's resiliency. In 2009, 39% of net sales were in the livestock-and-pet category -- an expense animal owners will pay even during lean times. And this category is only more important for Tractor Supply now. Investors are waiting on the annual filing for 2022, but livestock-and-pet sales accounted for 47% of sales in 2021.

To put this all into perspective, Tractor Supply's supply chain moved more than 8 billion pounds of animal feed in 2022. To me, that's too much weight for e-commerce companies to want to get involved.

Moreover, on the topic of resiliency, Tractor Supply had over 28 million members in its customer loyalty program at the end of 2022, up 20% year over year. These customers accounted for 75% of the company's sales last year, suggesting its core customer base is a big fan of the brand -- something that can help it remain strong during any potential economic downturn.

With fiscal discipline, ongoing sales growth, and regular share repurchases, Tractor Supply's earnings per share (EPS) are growing at a rate capable of carrying the stock to market-beating gains. Its regular increases to the dividend are generous as well, as the chart below shows.

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Ulta Beauty - >>> Ulta Beauty offers a unique opportunity among cosmetics stocks. The company is a retailer of beauty products, with stores found in strip malls across the country. Its hair salons also help drive traffic into its stores, giving the company an advantage that other brick-and-mortar retailers don’t have, as well as an edge over other beauty retailers such as Sephora.


https://www.fool.com/investing/stock-market/market-sectors/consumer-staples/cosmetic-stocks/


The company has put up steady comparable sales growth over its history and the stock has been a steady winner, up more than 400% over the past decade. Ulta also signed a deal with Target (NYSE:TGT) to open 100 stores inside Target locations over the coming years, providing another avenue for growth for the company.

Like most brick-and-mortar retailers, the company struggled through much of the pandemic, but the business is now on the rebound. Its results are above pre-pandemic levels and on track for record results this year, including close to $15 in earnings per share -- strong EPS growth from before the pandemic.

Considering the broader tailwinds in cosmetics and the company’s unique business model, Ulta seems poised for continued growth.

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Walmart - 10 recession stocks -


https://www.insidermonkey.com/blog/5-companies-and-industries-that-make-money-during-a-recession-1113601/5/


Industry: Hypermarkets and Super Centers


S&P 500 Outperformance in 2008: 56.3%


Walmart Inc. (NYSE:WMT) is a consumer staples company that operates retail, wholesale, and other units globally. It is based in Bentonville, Arkansas.

Ivan Feinseth at Tigress Financial upgraded Walmart Inc. (NYSE:WMT) shares from Neutral to Buy on January 26, with a $176 price target.

Walmart Inc. (NYSE:WMT) falls under the category of discount stores that sell general merchandise. Consumers with limited purchasing power during a recession thus find value in such companies. The company generated a total return of 7.4% between 2007 and 2009. Its stock also outperformed the S&P 500 by 56.3% and 5.1% in 2008 and 2020, respectively.

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Ross Stores - 10 recession stocks -


https://www.insidermonkey.com/blog/5-companies-and-industries-that-make-money-during-a-recession-1113601/3/


Industry: Apparel Retail

S&P 500 Outperformance in 2008: 33.15%


Ross Stores, Inc. (NASDAQ:ROST) operates off-price retail apparel and home fashion stores. The company’s brands include Dress for Less and dd’s Discounts.

An Overweight rating was reiterated on Ross Stores, Inc. (NASDAQ:ROST) shares on January 13 by analyst Adrienne Yih at Barclays.

Between 2007 and 2009, Ross Stores, Inc. (NASDAQ:ROST) generated a total return of 10.1%. The company strives to offer 20%-60% savings on branded clothes compared to department stores. As such, during recessions the company has managed to perform well since it offers consumers a much cheaper alternative for quality clothing when money is tight.

Madison Funds, managed by Madison Investment Management, mentioned Ross Stores, Inc. (NASDAQ:ROST) in its fourth-quarter 2022 investor letter. Here’s what the firm said:

“The top five contributors for the quarter were Arch Capital Group, Ross Stores, Inc, Gartner, Markel, and PACCAR. Ross Stores is experiencing a difficult retail environment for the low-end consumer. However, results held up better than expected and the outlook appears to be improving.”

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