Barrons: Buy $ASO $AZO $COST $DG $HD

Barrons headline: 5 Retail Stocks Worth a Look, and 1 to Avoid

By Teresa RivasFollow
June 10, 2022 12:30 am ET

Costco Wholesale $COST, a long-term winner, has gained more ground against its competitors throughout the pandemic. The company gets high marks from consumers when it comes to value, a factor that is becoming more top-of-mind as inflation remains stubbornly high. The chain’s membership fees provide a bit of stability to its profits. In fact, Costco is the only megaretailer to still provide monthly same-store sales updates, and these have been persistently strong. The shares aren’t cheap, but investors haven’t hesitated to pay a premium for them in recent years.

Dollar General $DG delivered a strong first quarter and an upbeat outlook when it reported results last month, in contrast to Walmart. Compared with big-box retailers, the discounter’s numerous stores tend to be closer to lower-income consumers who might be more closely watching how many miles they’re driving, given high gas prices. Dollar General has made strides in areas like fresh food, and although it may be a winner among consumers now trading down to save money, its long-term track record shows that it performs well in good times, too.

More at the link above. Color me surprised to learn $DG is selling “fresh food?”

On auto part, I agree Autozone is a good choice. I like O’Reilly too. High prices, non-availability of new cars, and people with time on their hands as the economy slows are all plusses.

I own Costco and so far have gotten thumped. Some retailers are getting hurt like Walmart and Target. Others like Macy’s think their clients are upscale and less impacted by recession. Right now Dollar General and Academy Sports look risky. Home Depot (and Lowes) has a counter cyclical component like auto parts and people with time on their hands can take on projects. Have owned them in the past but not please with results.

These are not growth companies. You are betting on short term recovery. Until interest rates have peaked?

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I’ve noticed a turnaround on many auto parts companies which have been hammered down. By turnaround, I simply mean a downtrend reversal with improving 20 and 50 EMAs, or even better, a Bullish Crossover.

If any of the five charts named in the OP scream “buy” this week, I’ll post to this board.

I’d like to know why you feel $DG is risky? I would think $DG is on the minds of consumers conscious of inflation just like keeping their old cars running via $AZO?

Okay, I’ve got to get cooking on my end of week round up of indices, treasury yields, metals, etc.

I’ll look over charts of the OP later and continue looking at used parts for autos.

Two places my port is solidly in the green: energy and agriculture.

Investors bought low end retailers as defensive plays thinking that rising prices would cause buyers to scale back spending my moving to low end stores.

Certainly Dollar General is one of those. Well managed and respected for it only store in a rural community strategy.

But then we see that Walmart and Target are hurt by rising costs. Labor and transportation. Ie they have been unable to recover all their cost increases with higher prices.

Is Dollar General the exception? Or will they be impacted too?

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