Yahoo Finance 6 Discount Retailers To Invest In for 2024
Discount retailers are considered “countercyclical” stocks. This means that they tend to perform better than the overall market during economic slowdowns or recessions, but they tend to lag when the economy is booming. This is because discount retailers, by definition, sell lower-cost products that tend to rise in popularity when money is tight. When everyone has a job and the stock market is soaring, on the other hand, consumers tend to spend money on higher-ticket items, leaving discount retailers in the dust.
Check Out: 10 Valuable Stocks That Could Be the Next Apple or Amazon
Read Next: 4 Genius Things All Wealthy People Do With Their Money
Whether or not a recession lies ahead in 2024 or 2025 is still a matter of heated debate, but it’s usually a good time to pile into discount retailers before signs of economic weakness, as it may be too late if and when a recession finally arrives. With that in mind, here’s a look at some of the best-positioned discount retailers based on valuation, projected growth rates and economic position. Bear in mind that you should always do your own due diligence before investing in any stocks, and consider speaking with a financial advisor.
Wealthy people know the best money secrets. Learn how to copy them.
Ross Stores (ROST)
Stock price as of June 18: $148.69
Year-to-date performance: 7.99%
Five-year performance: 53.73%
Average analyst one-year price target: $163.76
Ross Stores is a giant in the discount retail industry, with 2023 revenues of $20.4 billion. This member of the S&P 500, Fortune 500 and Nasdaq-100 has outpaced the S&P 500 over the past one- and three-year periods, even during a great economy, and analysts see more strong growth ahead.
Explore More: In 5 Years, These 2 Stocks Will Be More Valuable Than Apple
Walmart (WMT)
Stock price as of June 18: $67.60
YTD performance: 29.52%
Five-year performance: 101.12%
Average analyst one-year price target: $72.29
If you’re looking for the elephant in the room when it comes to retail, look no further than Walmart. The Arkansas-headquartered company is among the largest retailers in the entire world, and its size allows it to cut prices to very attractive levels for its shoppers. The stock pays a modest 1.24% dividend but has also trounced the performance of the S&P 500 over the YTD, one-year, three-year and five-year periods.
Costco Wholesale (COST)
Stock price as of June 18: $870.75
YTD performance: 32.32%
Five-year performance: 263.01%
Average analyst one-year price target: $841.75
Costco may not be the first name you think of when you consider discount retailers, but its whole business model is based around cutting prices to value levels on a wide range of ever-changing products. The treasure-hunt aspect of the store is one of the many reasons why the membership club has an astonishing 92.9% renewal rate in the U.S. and Canada, meaning shoppers consider it a deal to pay $60 or more per year just to shop at the store. The stock’s YTD, one-year, three-year and five-year returns are off the charts, the best among any retailer on this list.
Target (TGT)
Stock price as of June 18: $142.54
YTD performance: 0.83%
Five-year performance: 82.12%
Average analyst one-year price target: $174.92
Target has struggled a bit compared with its peers and the overall market over the past three years, but analysts see a brighter future ahead. The well-known discount retailer posted over $107 billion in revenue for the year ending Jan. 31. On May 20, Target announced it would be lowering prices on 5,000 frequently shopped items in an effort to drive more traffic to its stores.
Dollar Tree (DLTR)
Stock price as of June 18: $107.24
YTD performance: -24.51%
Five-year performance: -0.82%
Average analyst one-year price target: $141.14
Dollar Tree has had a rough go of it over the past five years, but analysts think the company may be turning the corner, with a projected 12-month gain of 31.6%. However, it should be noted that there is far from a consensus view on the stock, as analyst forecasts for its price range from $115 to $170.
If your view is that a recession or other negative event is on the horizon, however, DLTR has proven staying power. During the 2007-08 financial crisis, for example, Dollar Tree held up much better than the S&P 500. As of Oct. 1, 2008, DLTR was down 7.1% vs. the 20.4% in the S&P 500, and by March 1, 2009, DLTR was actually up 7.4% while the S&P 500 was still down 21.8%.
Big Lots (BIG)
Stock price as of June 18: $1.88
YTD performance: -75.87%
Five-year performance: -92.52%
Average analyst one-year price target: $2.88
Big Lots is the speculative, “swing for the fences” option if you’re looking for an aggressive play in an otherwise fairly staid industry. Big Lots is now officially a penny stock, having fallen 97% over the past three years. But analysts predict a 53.19% stock rise over the coming 12 months.
The stock trades at a price/earnings-to-growth ratio of 0.88, meaning its price is below its growth rate. This is generally a favorable indication for a stock going forward, as it’s a sign that a stock has fallen out of favor and could surprise on the upside. Just keep in mind that at its current price, the stock remains speculative.
Data is accurate as of June 18, 2024, and is subject to change.
More From GOBankingRates
I'm a Bank Teller: 4 Reasons You Should Withdraw Your Savings Right Now
This is The Single Most Overlooked Tool for Becoming Debt-Free
This article originally appeared on GOBankingRates.com: 6 Discount Retailers To Invest In for 2024
