The stock market gained on Monday due to optimism on resilient economy and a possible start of a rate cut this year. Investors are awaiting May retail sales data, as well as home sales and housing starts data, which will be out on Tuesday and Thursday, respectively.
Overall, S&P 500 rose 0.8% to 5,473, while NASDAQ increased 1.0% to 17,857.
Tweet of the Day
Capital Allocation at $LULU
h/t @borrowed_ideas pic.twitter.com/598vVMnDir
— Jerry Capital (@JerryCap) June 6, 2024
Chart of the Day
Here is the one-year chart of Tractor Supply (TSCO) as of May 14, 2024, when the stock was at $275.
Tractor Supply had nice sales growth when inflation was high years ago. Now, with tame inflation, the company is having a tough time growing profits in a soft economy. It reported 11% profit growth last quarter on 3% sales growth as same-store sales grew just 1%. Management stated that they just lapped its two most challenging quarterly comparisons, which should mean better times ahead. Instead, quarterly profit estimates are 3% profit growth next quarter and -4% the quarter after that. That’s weak. In addition, the stock has a lofty P/E of 26. David Sharek, Founder of School of Hard Stocks, thinks that P/E should be 22, and he feels the stock is overvalued by 17%.
TSCO is on the radar for the Conservative Growth Portfolio.
