Thanks to rising costs, many are living through difficult economic times and, naturally, seek ways to navigate the current conditions. It is essential to understand that consumers, now more than ever, are searching for ways to maximize the value of their hard-earned dollars. The state of our economic climate has made discount stores — often overlooked in favor of high-profile investments — start to trend. Their intrinsic qualities make them a strategic choice during uncertain market conditions.
What are discount stores and retailers?
Discount retailers are stores that offer quality products at lower prices. These companies are well-poised to exploit consumer sentiment and historically outperform the broader market during economic instability. They provide e-commerce websites, and offer members-only coupons, wholesale discounts, or everyday low prices as part of their strategy. This business model has thrived through more challenging stages of the economy thanks to their ability to provide consumers with the best prices for high-quality items.
If you are looking for companies with successful business models during these uncertain times, we have a few selections for you.
Here are three discount stores currently trending up.
TJX Companies, Inc. (TJX)
TJX Companies, Inc. is a various countries discounted apparel and home fashion retailer. TJX Companies operates in three main segments:
- Marmaxx and HomeGoods
- TJX Canada
- TJX International
TJX’s store offers off-price items from home fashions, including furniture, rugs, lighting, soft home, decorative accessories, family apparel, tabletop and cookware, gourmet food, and family apparel. The company’s track record of continuously offering lower prices via its off-price business model has allowed it to maintain steady sales and grow earnings across different economic environments. Incidentally, TJX’s successful business model gives both its customers and investors a chance to make the most out of their hard-earned money.
Where are we now?
TJX is trading near its year-high after recovering from its consolidation within the $85.00-88.00 area. 14-day RSI is strong and may continue to rise. Investors looking to buy into TJX can wait for prices to firmly establish support before buying. Alternatively, they can wait for a breakout with confirmation or a retest of its 50-day SMA(yellow line).
Groupon, Inc. (GRPN)
Groupon, Inc. is a globally-scaled e-commerce marketplace that connects merchants and consumers via its platform. Groupon hosts a marketplace of discount deals ranging from travel, jewelry, toys, household items, and apparel. Groupon operates a marketplace catering to three categories:
- Local
- Goods
- Travel
The company offers its users a wide range of packages and discounted rates within these categories. GRPN has become a favorite of deal-hungry consumers through the years, as its unique offerings cater to various needs of the markets that are not readily available, like discount stores.
Should you buy now?
GRPN is currently undergoing price correction after reaching a new year-high and breaching the overbought status - according to its 14-day RSI. Investors looking to buy into this correction can wait for prices to consolidate and retest their immediate support around the $9.45 area before making their entries.
Costco Wholesale Corporation (COST)
Costco Wholesale Corporation is an international retailer offering membership-only discounted wholesale products. Costco helps its customers reduce costs by providing lower-priced products in bulk and passing on the savings to customers planning to buy products for everyday use or resale. Costco also offers products under its house brand Kirkland Signature. Besides in-store purchases, the company also operates an e-commerce website in countries outside the U.S., including Japan, Taiwan, Australia, the U.K., Mexico, Korea, and Canada.
Is it time to pick this up?
COST recently hit its 52-week high and is testing its immediate support around the $540.00 area. While prices may have dropped to its 50-day SMA, buyers could still scoop up COST and defend the support area, as shown in yesterday's price action. The next few candlesticks should guide investors interested in COST via its price action if it's time to buy or wait.
Final Thoughts
Savvy investors will find opportunities in every corner regardless of market conditions. Higher prices have highlighted the beauty of discount stores as they have become a staple for consumers looking to stretch every penny. As a result, these companies are even more attractive as the trend grows and persists. The next question now is, which one should you buy?
On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
