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Inflation Leads Shoppers to Discount Stores: 4 Stocks to Watch
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Rising inflation across a range of products is pinching consumers' pockets, who are now flocking to discount stores to cope with the same. Well, the strategy to sell products at discounted prices has helped industry players draw customers, who have been seeking both value and convenience amid rising prices. The consumer price index rose 0.8% month-on-month in November, following an increase of 0.9% in October. This jump was primarily led by gasoline prices. On a year-over-year basis, the metric rose 6.8%, the fastest pace since 1982.
Under the current circumstances, people in the low-to-middle income groups have been exhibiting a preference for discount stores to get quality products at reasonable prices. Clearly, a differentiated product range resonates well with customers’ spending habits. Shoppers are looking for better deals — be it essentials or other consumer goods — amid the current inflationary environment.
No wonder, industry participants have been focusing on deepening engagements with consumers, creating innovative and compelling products, and enhancing digital and data analytics capabilities to capitalize on the prevailing scenario. The companies have also been offering the best deals to woo bargain hunters to make the most of the holiday season. With global supply chains in disarray, retailers have been ensuring that they stock enough to meet the anticipated consumer demand for the festive season.
Keeping in mind consumers’ product preferences, retailers have been replenishing shelves with in-demand merchandise. Initiatives such as building omni-channel, coming up with loyalty and marketing programs, and providing faster delivery options, be it doorstep delivery, curbside pickup or buy online and pick up at store, are worth mentioning.
That said, we have highlighted four stocks from the Retail – Discount Stores industry that look well-poised to serve customers in this inflationary environment. The industry currently carries a Zacks Industry Rank #68, which places it in the top 27% of more than 250 Zacks industries.
Price Performance Year to Date
Image Source: Zacks Investment Research
4 Prominent Stocks
Target Corporation (TGT - Free Report) has been making investments to enhance omni-channel capabilities, develop new brands, refurbish stores and expand same-day delivery options to provide a seamless shopping experience to customers. Markedly, this general merchandise retailer has been making multiple changes to its business model to adapt and stay relevant in the ever-evolving retail landscape. Shoppers can even join the retailer's loyalty program, Target Circle, and maximize savings on every purchase they make. The Target RedCard also offers a 5% discount.
Impressively, Target has a trailing four-quarter earnings surprise of 19.7%, on average. This Zacks Rank #2 (Buy) company has an estimated long-term earnings growth rate of 14.4%. The Zacks Consensus Estimate for Target’s current financial year sales and EPS suggests growth of 13.9% and 40%, respectively, from the year-ago period. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Costco Wholesale Corporation’s (COST - Free Report) growth strategies, better price management, decent membership trends and increasing penetration of e-commerce business have been contributing to its performance. Cumulatively, these factors have been aiding this operator of membership warehouses in registering an impressive comparable sales run. Costco has been rapidly adopting the omni-channel mantra to provide a seamless shopping experience, whether online or in stores.
Costco has a trailing four-quarter earnings surprise of 8.3%, on average. This Zacks Rank #2 company has an estimated long-term earnings growth rate of 8.8%. The Zacks Consensus Estimate for Costco’s current financial year sales and EPS suggests growth of 10.7% and 13.2%, respectively, from the year-ago period.
The TJX Companies Inc.’s (TJX - Free Report) flexible off-price business model, store expansion strategies, strong vendor relationship and availability of branded merchandise provide tremendous opportunities to drive sales and traffic. This was evident from The TJX Companies’ stellar performance in third-quarter fiscal 2022, wherein both the top and the bottom line not only beat the Zacks Consensus Estimate but also improved year over year.
Impressively, The TJX Companies has a trailing four-quarter earnings surprise of 16%, on average. This Zacks Rank #3 (Hold) company has an estimated long-term earnings growth rate of 10.5%. The Zacks Consensus Estimate for The TJX Companies’ current financial year sales and EPS suggests growth of 52.4% and 841.9%, respectively, from the year-ago period.
Dollar General Corporation’s (DG - Free Report) better pricing, private label offerings, effective inventory management and merchandise initiatives have been aiding its performance. These, along with a focus on consumable and non-consumable categories, are noteworthy. Dollar General has been offering “better-for-you” products at affordable prices. Additionally, it has been expanding cooler facilities to drive the sale of perishable items. Initiatives such as DG Pickup and DG GO! mobile checkout aims to provide a convenient and contactless shopping experience. The company has partnered with DoorDash, the last-mile logistics platform, to offer same-day delivery of essential household items.
Dollar General has a trailing four-quarter earnings surprise of 8.8%, on average. This Zacks Rank #3 company has an estimated long-term earnings growth rate of 12.3%. The Zacks Consensus Estimate for Dollar General’s current financial year sales suggests growth of 1.5% from the year-ago period.
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Inflation Leads Shoppers to Discount Stores: 4 Stocks to Watch
Rising inflation across a range of products is pinching consumers' pockets, who are now flocking to discount stores to cope with the same. Well, the strategy to sell products at discounted prices has helped industry players draw customers, who have been seeking both value and convenience amid rising prices. The consumer price index rose 0.8% month-on-month in November, following an increase of 0.9% in October. This jump was primarily led by gasoline prices. On a year-over-year basis, the metric rose 6.8%, the fastest pace since 1982.
Under the current circumstances, people in the low-to-middle income groups have been exhibiting a preference for discount stores to get quality products at reasonable prices. Clearly, a differentiated product range resonates well with customers’ spending habits. Shoppers are looking for better deals — be it essentials or other consumer goods — amid the current inflationary environment.
No wonder, industry participants have been focusing on deepening engagements with consumers, creating innovative and compelling products, and enhancing digital and data analytics capabilities to capitalize on the prevailing scenario. The companies have also been offering the best deals to woo bargain hunters to make the most of the holiday season. With global supply chains in disarray, retailers have been ensuring that they stock enough to meet the anticipated consumer demand for the festive season.
Keeping in mind consumers’ product preferences, retailers have been replenishing shelves with in-demand merchandise. Initiatives such as building omni-channel, coming up with loyalty and marketing programs, and providing faster delivery options, be it doorstep delivery, curbside pickup or buy online and pick up at store, are worth mentioning.
That said, we have highlighted four stocks from the Retail – Discount Stores industry that look well-poised to serve customers in this inflationary environment. The industry currently carries a Zacks Industry Rank #68, which places it in the top 27% of more than 250 Zacks industries.
Price Performance Year to Date
4 Prominent Stocks
Target Corporation (TGT - Free Report) has been making investments to enhance omni-channel capabilities, develop new brands, refurbish stores and expand same-day delivery options to provide a seamless shopping experience to customers. Markedly, this general merchandise retailer has been making multiple changes to its business model to adapt and stay relevant in the ever-evolving retail landscape. Shoppers can even join the retailer's loyalty program, Target Circle, and maximize savings on every purchase they make. The Target RedCard also offers a 5% discount.
Impressively, Target has a trailing four-quarter earnings surprise of 19.7%, on average. This Zacks Rank #2 (Buy) company has an estimated long-term earnings growth rate of 14.4%. The Zacks Consensus Estimate for Target’s current financial year sales and EPS suggests growth of 13.9% and 40%, respectively, from the year-ago period. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Costco Wholesale Corporation’s (COST - Free Report) growth strategies, better price management, decent membership trends and increasing penetration of e-commerce business have been contributing to its performance. Cumulatively, these factors have been aiding this operator of membership warehouses in registering an impressive comparable sales run. Costco has been rapidly adopting the omni-channel mantra to provide a seamless shopping experience, whether online or in stores.
Costco has a trailing four-quarter earnings surprise of 8.3%, on average. This Zacks Rank #2 company has an estimated long-term earnings growth rate of 8.8%. The Zacks Consensus Estimate for Costco’s current financial year sales and EPS suggests growth of 10.7% and 13.2%, respectively, from the year-ago period.
The TJX Companies Inc.’s (TJX - Free Report) flexible off-price business model, store expansion strategies, strong vendor relationship and availability of branded merchandise provide tremendous opportunities to drive sales and traffic. This was evident from The TJX Companies’ stellar performance in third-quarter fiscal 2022, wherein both the top and the bottom line not only beat the Zacks Consensus Estimate but also improved year over year.
Impressively, The TJX Companies has a trailing four-quarter earnings surprise of 16%, on average. This Zacks Rank #3 (Hold) company has an estimated long-term earnings growth rate of 10.5%. The Zacks Consensus Estimate for The TJX Companies’ current financial year sales and EPS suggests growth of 52.4% and 841.9%, respectively, from the year-ago period.
Dollar General Corporation’s (DG - Free Report) better pricing, private label offerings, effective inventory management and merchandise initiatives have been aiding its performance. These, along with a focus on consumable and non-consumable categories, are noteworthy. Dollar General has been offering “better-for-you” products at affordable prices. Additionally, it has been expanding cooler facilities to drive the sale of perishable items. Initiatives such as DG Pickup and DG GO! mobile checkout aims to provide a convenient and contactless shopping experience. The company has partnered with DoorDash, the last-mile logistics platform, to offer same-day delivery of essential household items.
Dollar General has a trailing four-quarter earnings surprise of 8.8%, on average. This Zacks Rank #3 company has an estimated long-term earnings growth rate of 12.3%. The Zacks Consensus Estimate for Dollar General’s current financial year sales suggests growth of 1.5% from the year-ago period.