Agro Sector Ideas

[gfp927z]

>>> 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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