#7 - Big Lots (NYSE:BIG)
Big Lots has been working hard the last few years on a project it calls Operation North Star. The project amounts to an end-to-end shift in how the company does business, including store updates, streamlining operations, and a focus on eCommerce. Those efforts began to pay off at the beginning of 2020, and the pandemic did little to hinder them. Yes, store traffic was hurt when the shut-downs took place, but eCommerce helped carry the company through, and the reopening rebound has been stunning. Revenue in the 2nd quarter grew 31.2% on YOY basis despite widespread shutdowns.
Big Lots is another great dividend payer and one that could begin raising its distribution very soon. The stock yields about 2.5%, with share prices near $50, and the payout ratio is meager. At only 18% of earnings, the company has plenty of cash to give back. And that doesn’t take into account the company’s massive cash pile.
About Big Lots
Big Lots, Inc, through its subsidiaries, operates as a home discount retailer in the United States. The company offers products under various merchandising categories, such as furniture category that includes upholstery, mattresses, home décor, case goods, and ready-to-assemble departments; seasonal category, which comprises patio furniture, gazebos, Christmas trim, lawn and garden, and other holiday departments; soft home category consists of apparel, hosiery, jewelry; frames, fashion and utility bedding, bath, window, decorative textiles, and area rugs departments; and food category that includes beverages and grocery, specialty foods, and candy and snacks departments.
Read More - Current Price
- $0.00
- Consensus Rating
- Reduce
- Ratings Breakdown
- 0 Buy Ratings, 2 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $2.00
The Conclusion: The Pandemic Killed Some Retailers, But Not Retail
The retail landscape certainly changed. Businesses with too-heavy reliance on brick&mortar, too-little eCommerce presence, or not enough cash are in trouble. There have already been dozens of bankruptcies, and there will likely be more, but that doesn’t mean all retailers are in trouble.
Many U.S. retailers were in the perfect position for a windfall of cash blown loose by the pandemic. If not, there were at least able to weather the storm and come back fighting.
The takeaway for investors is that retail trends sparked by the pandemic have not yet run their course. We’re only in the mid-game when it comes to the economic rebound, and we’re coming up on the holiday season. Spending is only going to increase. And that’s not counting any more stimulus.
If you are interested in gaining exposure to the Retail Sector, you will do well with any of our list's stocks. Now it’s time to pick the best one for your portfolio.
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