As mentioned last month, we’ve achieved some stability in regards to which stocks remain the crème de la crème. This month, we are keeping three of our previous month’s Top 5 stocks, swapping out two, and adding five new names to our Top Stocks list.
First, our swap-out names:
Alexion Pharmaceuticals (NASDAQ:ALXN), and McDonald’s (NYSE:MCD). Both of these stocks are still A-rated buys, and they are held in high regard, but I’m substituting in two other consumer-driven stocks that have even better top- and bottom-line prospects. With consumer confidence and spending on the rise, you’ll want to get a piece of these companies that have stunning track records of accelerating sales growth.
Now let’s move to our additions:
As the leading auto parts chain in the U.S., AutoZone (NYSE:AZO) is known for helping its customers “Get in the Zone.” And lately, more and more people have been going to AutoZone to keep their cars running longer. This trend is most clearly shown in AutoZone’s quarterly same-store sales results, which have been steadily increasing over the past few quarters.
In the most recent quarter, the company’s same-store sales grew 5.9%, which accelerated from the prior quarter’s 4.6% gain. Another thing I love about this stock is that it has a solid history of share repurchase programs. A few weeks ago, management announced that the company is buying back an additional $750 million in its stock. The company is clearly committed to returning value to its shareholders.
Dollar General Corporation (NYSE:DG) is another retailer that has benefited from the recent wave of frugality that has hit the U.S. With just under 10,000 stores nationwide, the company offers a wide range of discount goods for $10 or less. I’m keeping both Dollar General and Dollar Tree on the Top 5 because they both serve two complementary but different functions as bargain retailers.
As it stands, Dollar General boasts better earnings growth (the second-best in the industry, in fact), while Dollar Tree has a better track record with its sales growth. Dollar General is also larger and has a slightly lower Price/Earnings ratio.