Walmart, TJX and Dick’s Sporting Goods: Retail Stocks to Watch News ad

Consumer habits have changed, but costs remain high, leaving big box stores like Walmart. New York Stock Exchange: WMTTJX Companies New York Stock Exchange: TJXand Dick’s sporting goods New York Stock Exchange: DKS in a solid position. Their dominant position allows them to benefit consumers while gaining market share in a tepid retail environment. The bottom line is that these companies will maintain growth in 2025 and increase their earnings, which is critical as cash flow and return on equity are central to the investment thesis. These companies pay dividends and maintain significant share ownership, providing a tailwind for value that is likely to rise as the year progresses.

Walmart’s Everyday Low Prices Boost Value for Investors

Walmart and the retail sector won’t have the highest growth in 2024, but they will maintain growth and expand their profits. Walmart is projected to increase its revenue by nearly 5% through international expansion and non-core businesses including advertising, with profits doubling. Profitability levels will depend on revenue leverage and cost control, with the bottom line being strengthened by share repurchases. Walmart is not an aggressive stock repurchaser, but it does compensate for dilution and stock-based compensation, which is sufficient. The company bought back $3 billion in the first three quarters of 2024 and is likely to maintain that pace for the foreseeable future.

Walmart’s dividend isn’t high or comparable to the S&P 500 (1%), but it is among the most reliable. The company’s balance sheet contains debt but is well managed, leaving enough cash flow for annual increases and share buybacks. The company is a dividend king with over 50 years of consistent annual growth and still pays out less than 35% of earnings.

Analyst trends support the upward trend in WMT stock prices. The group has steadily raised its consensus rating and price target throughout 2024, pointing to a new all-time high for the stock. The consensus target matches the recent all-time high, but the latest revisions are much higher and suggest upside of 25% from the 2024 close.

TJX companies give them what they want

Consumers haven’t given up on discretionary products, including fashion and home goods, but they are price conscious, a trend that TJX companies are well positioned for. It has been growing steadily in line with industry trends, driven by strength from sales volumes and traffic across all banners rather than higher prices. The important detail is that there is also high profitability, aided by cost controls and industry trends.

Rising inventories following the COVID-19 pandemic and subsequent supply chain issues have hurt many full-price clothing retailers, but not TJX. TJX Companies, a discount retailer, now has a wide selection of products, allowing it to focus on the brands and products consumers want and pay prices it likes.

The company’s cash flow is driving the stock price higher in 2025. This allows TJX Companies to maintain a healthy balance sheet while returning capital and increasing payouts annually. Balance sheet and return on equity highlights include cash growth in 2025 despite buybacks, dividends and inventory increases. Other important points include an increase in total assets, which is only partially offset by an increase in liabilities. Debt remains relatively stable and equity is up nearly 20% year to date.

In terms of return of capital, share repurchases benefit shareholders by reducing shareholders by nearly 1.5% in the quarter. Dividend distribution increases annually. The dividend is attractive, with a yield of 1.35% representing just 35% of earnings, with a double-digit CAGR in recent years.

Dick’s Sporting Goods delivers big profits for investors

Dick’s management has been working diligently even before the pandemic to position the company as a leading omnichannel sporting goods retailer; Increased social distancing has changed the game and positioned the company as a leading sporting goods retailer. Dick’s now maintains growth, profitability, cash flow and a stable return on capital.

Dick’s Sporting Goods’ revenue and earnings are expected to grow in the mid-single digits in 2025, but the forecast is likely downbeat due to strong sales and market share gains in 2024.

Dick’s Sporting Goods is a quality dividend-growing stock that is actively expanding its distribution at a double-digit CAGR. The distribution growth rate is supported by revenue growth and a healthy balance sheet, so it is resilient and able to support higher share prices. Return on equity includes dividends yielding nearly 2%, shares near record levels and buybacks. Buybacks reduced their number by an average of 1.80% in the third quarter and are expected to continue to decline at a pace in calendar year 2025.

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