Tractor Supply (TSCO-Q)

(A Top Pick Nov 09/22, Up 10%)

They target hobby farmers who need lawnmowers, snow blowers, livestock feed, etc. Their customers have higher than usual disposable incomes and live outside cities, so their living expenses are lower. Also, they live in remote areas away from Costcos and other shops. TSCO has 2,000 stores in the US and keep opening a hundred or so annually. They keep growing same-store sales, though the rate has been declining lately. Offers good historic growth. Continues to like this.

He liked consumer stocks a lot until several months ago. We have now gotten into a time period where he thinks the gasoline price is up 15% year-over-year, which is a tax on the consumer. We are also starting to feel the effects and hear the complaints about how much healthcare costs have gone up. This explains the underperformance of any consumer stocks. This company was recommended to him as being interesting because they were able to generate some same-store sales growth until recently. They sell to hobby farmers, and he doesn’t know how to analyse that.

(Top Pick Jun 7/16, Down, 12.78%) Largest recreation retailer to the hobby ranchers in the US. A weak second quarter was caused by weather. Same store sales were down 0.5% vs. expectations of up 3% and caused the stock to come down.

The largest specialty retailer to the recreational farming and ranching communities in the US. It is 3X the size of their next 6 competitors combined. Their core customer is the hobby farmer/rancher. They sell everything from electric mowers to pet food. They operate in smaller towns without the Walmarts and Petsmarts of the world. You will see 15% earnings growth and 20% dividend growth as far as the eye can see, on the back of 5% same-store comps, a percent square footage, improvement in margins and buying shares back. Dividend yield of 1%.