I wrote this article up yesterday right after I ordered groceries from my local Whole Foods. I’ve found sometimes ordering online is way easier than going out to buy even just a handful of things. Plus, I can spend my time on things that I’d rather be doing.
And I know I’m not the only one who has taken to the preference of just ordering things online. It’s becoming almost too convenient.
Amazon.com, Inc (Nasdaq: AMZN, Rated “B”) is one of the clear winners during the pandemic. It owns over 40 subsidiaries including Audible, Whole Foods and Zappos.
It’s not that it simply has its hands in everything, it’s that it has its hands in right places.
Groceries, e-commerce and on-demand entertainment are where you want to be right now. The company continues to hire additional workers and drivers to meet historic demand. As a result of more and more people shopping online, shares are up 66% since the beginning of the year.
Retailers are going to need to adapt or fail as consumer priorities change. This is going to include both the shopping experience and the products offered.
Just look at Men’s Wearhouse, Jos A. Banks, Ann Taylor and Neiman Marcus. All their respective parent companies have entered chapter 11 bankruptcy in the recent weeks. With more and more people working from home, comfort is key. You only need to have one or two button down shirts for the occasional video meeting.
This is a worldwide phenomenon. The Hong Kong Retail Management Association expects 25 percent of retail stores to close by the end of the year.
So for today, I decided to take a look at what brick and mortar retailers the Weiss Ratings System is identifying as a “Buy” right now.
Coming in at the top of the list is Dollar General Corporation (NYSE: DG, Rated “A”).
That “A”rating indicates the company’s stock has an excellent track record for providing strong performance with lower-than-average risk. Also, it means it’s trading at a price that represents good value relative to the company’s earnings prospects.
Dollar General has been delivering value to shoppers for more than 80 years and currently has 16,500 stores in 46 states.
At the end of 2018, there were more dollar stores than the six largest U.S. retailers combined.
The pandemic has sent more people to the Dollar General because they’re looking for ways to save money. During the first quarter, sales increased 27% and operating profit increased 69%.
To meet the demand, the company recently announced plans to expand its distribution center presence.
And investors are taking notice.
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Shares are up 24% since the beginning of the year. It’s a no brainer. There is increasing demand, plus the company is able to continue paying its dividend of 36 cents every quarter.
The company will be sharing its second quarter earnings at the end of the month, which will only push shares higher.
Next up we’ve got Tractor Supply Company (Nasdaq: TSCO, Rated “B”). These rural lifestyle retail stores offer a selection of merchandise for the garden and livestock lover. As consumers found grocery store shelves completely empty and had free time on their hands, some decided to turn their balcony or backyard into a rural paradise.
Urban homesteading had already been a trend in some communities, but there is no denying that the coronavirus accelerated it. Shares for Tractor Supply are up 57% since the beginning of the year.
The Home Depot (NYSE: HD, Rated “B”) and Lowe’s Companies (NYSE: LOW, Rated “B”) come in neck and neck to round out our top three. These two companies saw people flocking to their stores to kill idle time and work on those previously neglected “honey-do” lists. Shares of Lowe’s are up 30% since the beginning of the year and Home Depot is right behind at 27%.
How about the some of the losers?
GameStop Corp. (NYSE: GME, Rated “D-”), Build-A-Bear Workshop (NYSE: BBW, Rated “D-”), Kirkland’s (Nasdaq: KIRK, Rated “D-”), Express Inc. (NYSE: EXPR, Rated “D-”) and Francesca’s Holdings (Nasdaq: FRAN, Rated “D-”) are among the long list of retailers with low ratings.
Remember, you can always go to the WeissRatings.com site to check the rating of a specific company. Or use the screener to find stocks by rating, fundamental or industry.
For the above names, I looked for companies in the retailing industry and sorted them by Weiss Rating.
Best wishes,
Kelly Green
