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Holiday sales missed expectations: here’s a retail stock to still buy

on Jan 18, 2023
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  • Holiday sales came in up a less than expected 5.3% on Wednesday.
  • Sandra Campos says Tractor Supply Co is still well positioned.
  • She made her case for the retailer on CNBC's "The Exchange".

S&P 500 ended nearly 2.0% down on Wednesday after the Census Bureau said the U.S. consumer did not spend as much as expected this holiday season.

Inflation is taking a toll on U.S. consumers

Holiday sales went up 5.3% year-on-year to $936.3 billion. In comparison, the National Retail Federation had forecast a 6.0% to 8.0% growth instead.

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Part of that weakness was related to tougher comparisons. But the data, nonetheless, speaks volumes to the impact of inflation and higher interest rates on consumers and suggests the year ahead will likely remain challenging for the retail space.

Still, a name like Tractor Supply Co (NASDAQ: TSCO) continues to benefit in the current environment, says Sandra Campos. She’s the former Chief Executive of DVF and currently sits on the board of Big Lots Inc.

Campos defends her view on Tractor Supply

Shares of the Brentwood-headquartered retail chain are up more than 10% versus late October but Campos says it may just have more room to run. On CNBC’s “The Exchange”, she noted:

Tractor Supply is a different type of retailer but one that’s benefitting from a pandemic-induced migration to rural areas. They have a more resilient customer as it’s need-based.

It’s loyalty programme and online footprint were among other reasons cited for the constructive view. Tractor Supply is expected to earn $2.35 a share this quarter versus $1.93 per share a year ago. It’s also a dividend stock that currently pays a yield of 1.71%.

Another retail stock Campos likes is Boot Barn Holdings Inc (NYSE: BOOT).