Stock (Symbol) |
Tractor Supply (TSCO) |
Stock Price |
$88 |
Sector |
| Retail & Travel |
Data is as of |
| November 19, 2015 |
Expected to Report |
| Jan 27 |
Company Description |
 Tractor Supply Company is an operator of retail farm and ranch stores in the United States. The Company operates retail stores under the names Tractor Supply Company and Del’s Farm Supply and operate a Website under the name TractorSupply.com. The Company’s stores are located in towns outlying metropolitan markets and in rural communities, and offer a selection of merchandise, which include equine, pet and small animal products, including items necessary for their health, care, growth and containment; hardware, truck, towing and tool products; seasonal products, including lawn and garden items, power equipment, gifts and toys; maintenance products for agricultural and rural use, and work/recreational clothing and footwear. The Company operates at farm and ranch retail sales segment, both at its retail locations and online. Source: Thomson Financial |
Sharek’s Take |
 Tractor Supply (TSCO) is the largest operator of rural lifestyle retail stores in the United States, servicing farmers, ranchers and small businesses. TSCO stock is also a winner, growing more than 20% a year the past decade with anticipated growth of 15% a year going forward. The combination of store growth of 7% to 8% per year, expanding profit margins, and same-store sales of 3% to 4% could mean profit growth in the high-teens per year. TSCO also pays a dividend of around 1% and management buys back stock. Next year should be a good one as the company grows its Purina selection, expands its outdoor recreational equipment, and rolls out its loyalty club program. Management sees it growing from 1,500 locations to 2,500 long-term, as it expands from the Midwest and South to the West and populated Northeast. Bottom line: Tractor Supply is a better business than you know — and so is its stock. TSCO is a solid selection for folks who want to buy-and-hold relatively safe stocks. Growth investors may with to wait for a pullback before buying as TSCO is selling around its 2016 Fair Value. |
One Year Chart |
 This stock has been overvalued for years, but at the current price TSCO is reasonable. Profits are growing in the high-teens and the P/E is 25. That seems fair. Stock hasn’t moved in around 9 months which is good as it was overvalued and needed to rest a bit. Note when TSCO corrects the stock drops to around $80. That’s what I would like to buy it at for the Growth Portfolio. |
Fair Value |
 Notice in this table that TSCO has sold for 25x earnings the last couple of years. 25x current 2016 profit estimates would be a $90 stock next year. That doesn’t give us much upside, but you’re still in a solid stock with long-term appreciation potential. |
Bottom Line |
 Tractor Supply is better business than you know — and so is its stock. The mix of more stores, higher sales per store, stock buybacks and dividends makes this a quality selection for conservative growth accounts in search of a stock with the ability to grow in the teens. But with limited upside to its 2016 Fair Value, I feel growth investors should be patient and try to get in around $80. TSCO ranks 14th in the Conservative Growth Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio 14 of 32 |
