The economy may be on the mend, but consumers aren’t rushing back to the stores to vote with their dollars this time around.
After 9/11, President George W. Bush appealed to Americans to go out and spend to bolster the U.S. economy, and the citizenry responded by spending like crazy, levering credit cards, real estate, you name it — until the bottom fell out for Wall Street and Main Street in 2008.
Now, as the U.S. economy lurches to its feet once again, American consumers are much more focused on saving than spending and a new generation of Americans have joined the workforce since then that have big student loan debt hanging over them.
We’re also entering the mid-point of the retiring of the baby boomer generation and seeing their spending habits shift as they move from prime earning years to more frugal retirement years.
Bottom line: These trends promise to be a boon for retailers that are focusing on the new class of cost-conscious shoppers.
The trio we’re about to discuss are perfect examples.
3 Retail Stocks to Buy Now – Dollar Tree, Inc. (NASDAQ:DLTR)
Dollar Tree, Inc. (NASDAQ:DLTR) is the most extreme example of the discount retailer, literally selling everything in its Dollar Stores for a dollar.
Dollar Tree operates other discount stores as well — Deal$, Dollar Tree Deal$, Dollar Tree Canada, Dollar Giant and Dollar Bills — totaling almost 5,000 stores throughout the U.S. and Canada.
The acquisition of Family Dollar Stores, Inc. (NYSE:FDO) has meant DLTR will need to close 340 stores per the Federal Trade Commission but that’s not going to matter much in the long term.
The thing is, once you get out of most large cities and suburbs, you start to understand how important these stores are. In most of America, the Dollar Store is a local fixture.
DLTR is also one reason why Wal-Mart Stores, Inc. (NYSE:WMT) is starting to build in this space. Wal-Mart superstores dot the rural landscape, but smaller, dollar-type stores are a priority for this retail monster.
DLTR is the kingpin at this point, and it will take a while for WMT to pose much of a threat. Up 47% in the past six months, DLTR still looks good.
3 Retail Stocks to Buy Now – Burlington Stores Inc (NYSE:BURL)
Burlington Stores Inc (NYSE:BURL) is another discount retailer, specializing in branded apparel.
BURL stock has been on quite a tear as well, up 45% in the past six months, and analysts are raising their short-term prices on BURL stock even now.
This slow-growth recovery is perfect for BURL customers. Burlington Stores’ customers are brand conscious but uninterested in paying a premium for those brands. Burlington Stores has over 3,500 different vendors. So, variety is not a problem when stocking the 500-plus BURL stores in the U.S. and Puerto Rico.
Last month, Burlington Stores reported Q4 earnings and trounced estimates, which signals that there is solid trend in place; shoppers are turning away from brand name stores for brand name goods and looking for off-price retailers like BURL.
There has been some recent insider selling but given the huge rise in BURL stock, it’s no surprise some of the top brass is taking advantage before tax time of their efforts. If management can stay focused on what got them this far, there are plenty of good years ahead for Burlington.
3 Retail Stocks to Buy Now – Target Corporation (NYSE:TGT)
Target Corporation (NYSE:TGT) hasn’t seen a lot of good press in the past year given the massive customer data breach and then the $2 billion cut-and-run decision regarding its stores in Canada.
So, the fact that TGT stock is up almost 40% in the past six months might be surprising to know. The data breach is behind Target, and the Canada bleeding has stopped.
What’s more, TGT is refocusing on its online sales, a segment that has been largely overlooked in recent years. And it’s paying off.
Last quarter, Target saw a 30% increase in online sales, as well as growth in store transactions. Best of all, margins are growing again, something that has dogged TGT for a while.
Coming quarters continue to look promising for TGT if it stays on this trajectory. And after being beaten down, TGT stock now looks like its starting to reflect a renewed outlook for its ability to thrive in this frugal environment.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.