5 Retail Stocks That Could Shine In A Slowdown

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Store sales themselves are critical to retailers, but many investors fear they will decline in 2022 because 2021 – a great year for the industry – has given them a boost. Analysts raised their estimates of the key gauge for just five companies in the past month.

Although definitions vary between companies, same-store sales, or similar sales, typically measure the change in revenue at stores that have been open for more than a year. This is useful because it shows how existing stores are performing – a company’s sales may go up if it adds new stores, but the expansion may not be positive if customers don’t return over time.

Concerns are growing about customers’ willingness to spend at the moment. Many investors worry that retailers will struggle to match the huge sales gains they made during the pandemic. Consumers no longer receive stimulus checks from the government, and their options for entertainment have expanded. The argument goes, now that people can go to restaurants or watch live entertainment, they will have less money to shop.

Moreover, the last month brought a lot of major news. Not only have big names across the spectrum posted crucial holiday quarter results, but gasoline prices have soared since Russia’s invasion of Ukraine, slashing consumers’ purchasing power at a time when inflation is already at its highest level in a decade.

So it’s no surprise that analysts, on average, take their same-store sales estimates for the full year lower, on average. Estimation for the industry as a whole, as tracked

set of facts
And the

It had fallen to 5.1% growth as of Thursday from 16.5% in the previous month.

Five companies bucked this trend. Analysts’ estimates of same-store sales for the full year for

dollar tree

(stock ticker: DLTR),

general dollar

(DG),

AutoZone

(AZO), Advance Auto Parts (AAP),

O’Reilly Motors

(ORLY) It went up over the last month.

company / bar	Last price	Latest SSS estimate
Dollar Tree / DLTR	$157.17	4.00%
Dollar General / DG	229.63	2.50
AutoZone / AZO	1,952.75	6.50
Advanced Auto Parts / AAP	206.34	2.00
O’Reilly Automotive / ORLY	689.98	5.70

Note: Forecasts are for a full year.

Source: FactSet

Dollar stores saw the biggest improvement. Analysts are becoming more optimistic about the Dollar Tree as the company revamps it directors group In response to pressure from an activist investor. at least two Analysts upgraded their ratings On the Dollar Tree in the news, the consensus now calls for same-store sales to rise 4% this year, up from a previous estimate of 1% growth.

In any case, consumers tend to trade at discounts when they pinch pennies, and Dollar General (DG) was optimistic in his view When it announced strong results for the fourth quarter this week. The Street now expects Dollar General to post same-store sales growth of 2.5%, while it previously forecast a decline.

Analysts also pushed their comparative sales estimates for the three auto parts dealers to a higher level. All three are expected to generate same-store sales growth this year.

This may seem illogical, given that higher gas prices lead people to drive less, which reduces vehicle wear. Some analysts may bet that vehicle shortages and economic uncertainty are causing consumers to stick to their cars longer, especially as more workers are commuting again, at least part of the time. The Group’s latest quarterly results It was quite strong.

Write to Teresa Rivas at teresa.rivas@barrons.com