One of the biggest concerns about U.S. Fed policy to print money is that jobs are not being created, infrastructure is not being built, and the value of existing assets is declining in real terms. Debt deleveraging also inflates commodity prices and wages abroad, especially in the emerging markets. An increase in food-stamp usage is indication that the steady unemployment figures is masking the hard times for middle-class families. In the United States, a record 46.7 million people used food-stamps in June.
Food-stamp usage was highest in California, with 4.012 million, and second highest in Texas.
In the past, discount dollar stores benefited from the food stamp enrollment. More recently, the growth trend for discount stores weakened in August. Yet last month, the sector showed negative year-over-year growth (from RetailGeeks). The proliferation of discount stores or shopping for deals online could also explain the weakening trend.
Business Section: Investing Ideas
The most well-known discount stores are large market capitalization like Wal-Mart Stores Inc. (WMT) and Costco (COST), but the pure play companies offering “dollar” items deserves greater attention. These are the companies that benefit most as food stamp usage rise.
The most dominate discount stores are:
1. Dollar General Corporation (DG, Earnings, Analysts, Financials): Operates as a discount retailer of general merchandise in the southern, southwestern, midwestern, and eastern United States. Market cap at $17.5B, most recent closing price at $52.45.
2. Family Dollar Stores Inc. (FDO, Earnings, Analysts, Financials): Operates a chain of self-service retail discount stores primarily for low and middle income consumers in the United States. Market cap at $7.52B, most recent closing price at $64.35. The company opened or remodeled nearly 2,100 stores over the last two years, and operates more than 7,300 stores in 45 states. The average size of each store is 7,000 square feet.
3. Dollar Tree, Inc. (DLTR, Earnings, Analysts, Financials): Operates discount variety stores in the United States and Canada. Market cap at $11.38B, most recent closing price at $49.41. Shares are on a steady decline, after peaking at $56.82 in 2012. Shares are on a steady decline, after peaking at $56.82 in 2012. Dollar Tree’s growth strategy is to open more productive stores. The company opened 77 new stores during the second quarter, and has 4,523 stores. For the full-year 2012, the company plans to include 315 new stores and relocate or expand 75 stores in North America.
Huffington Post listed 9 companies that would benefit from food stamps. Some of the companies mentioned were:
4. Kraft Foods Inc. (KFT, Earnings, Analysts, Financials): Together with its subsidiaries, manufactures and markets packaged food products worldwide. Market cap at $73.83B, most recent closing price at $41.60.
5. The Coca-Cola Company (KO, Earnings, Analysts, Financials): Distributes, and markets nonalcoholic beverages worldwide. Market cap at $173.95B, most recent closing price at $38.64. The company recently split shares 2 for 1.
6. Yum! Brands, Inc. (YUM, Earnings, Analysts, Financials): Operates as a quick service restaurant company in the United States and internationally. Market cap at $31.08B, most recent closing price at $68.19.
7. JPMorgan Chase & Co. (JPM, Earnings, Analysts, Financials): Provides various financial services worldwide. Market cap at $156.7B, most recent closing price at $41.25.
8. Pepsico, Inc. (PEP, Earnings, Analysts, Financials): Engages in the manufacture, marketing, and sale of foods, snacks, and carbonated and non-carbonated beverages worldwide. Market cap at $110.87B, most recent closing price at $71.24.
9. The Kroger Co. (KR, Earnings, Analysts, Financials): Operates as a retailer in the United States. Market cap at $12.58B, most recent closing price at $23.90.
10. Big Lots Inc. (BIG, Earnings, Analysts, Financials): Operates as a broad line closeout retailer in the United States. Market cap at $1.86B, most recent closing price at $31.19.
Written by Chris Lau. To interact and discuss these picks with users, attach your watch list or portfolio to your friends on Kapitall. Message the author. He is ranked sixth (by points) on the all-time leaderboard. The leaderboard is located on your score icon -> Leaderboard. Members on Kapitall earn free points, and even more points with every Kapitall Generation trade. These points may be redeemed at the Kapitall store.
Use Kapitall’s Tools: Looking for ways to analyze this list?
Use this article snapshot as a launch pad (click here for help): Simply click on the links, and use Kapitall’s tab navigation to browse through the data…
Analyze These Ideas: Getting Started
- Read descriptions for all companies mentioned
- Access a performance overview for all stocks in the list
- Compare analyst ratings for the companies mentioned
- Compare analyst ratings to annual returns for stocks mentioned
- Real-Time Opinion: Scan the latest tweets about these companies (feed will open in a new window)
Dig Deeper: Access Company Snapshots, Charts, Filings
- Dollar General Corporation (DG, Chart, Download SEC Filings)
- Family Dollar Stores Inc. (FDO, Chart, Download SEC Filings)
- Dollar Tree, Inc. (DLTR, Chart, Download SEC Filings)
- Kraft Foods Inc. (KFT, Chart, Download SEC Filings)
- The Coca-Cola Company (KO, Chart, Download SEC Filings)
- Yum! Brands, Inc. (YUM, Chart, Download SEC Filings)
- JPMorgan Chase & Co. (JPM, Chart, Download SEC Filings)
- Pepsico, Inc. (PEP, Chart, Download SEC Filings)
- The Kroger Co. (KR, Chart, Download SEC Filings)
- Big Lots Inc. (BIG, Chart, Download SEC Filings)
New to Kapitall?
1. New to the site? Click here to register for a free account, and gain access to more tools and data
2. Looking for more investing ideas like this? Click here to sign up for your free copy of Kapitall Weekly
3. Follow us on SeekingAlpha, Motley Fool, Nasdaq and Twitter
ABOUT KAPITALL WIRE
Kapitall Wire, which is not a broker/dealer, offers free cutting edge investing ideas, lively commentary and timely analysis of companies enhanced by interactive tools. And the Investing 101 section breaks complex concepts down to their basics, offering education to novices that doubles as a refresher course for more seasoned investors.
Kapitall Wire is a division of Kapitall Inc. Securities products and services are offered by Kapitall Generation, LLC, member FINRA/SIPC . Kapitall Generation, LLC is a wholly owned subsidiary of Kapitall, Inc.
