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5 Quality Retail Companies Trading at Attractive GF Values

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GuruFocus.com
·5 min read
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- By James Li

In light of accelerating March retail sales, five quality retail companies trading at attractive GF Value ratios as of Thursday are Amazon.com Inc. (NASDAQ:AMZN), Alibaba Group Holding Ltd. (NYSE:BABA), Costco Wholesale Corp. (NASDAQ:COST), Ollie's Bargain Outlet Holdings Inc. (NASDAQ:OLLI) and Weis Markets Inc. (NYSE:WMK) according to the All-in-One Screener, a Premium feature of GuruFocus.


Dow breaks 34,000 as retail sales blast off

The Dow Jones Industrial Average closed at 34,035.99, up 305.10 points from Wednesday's close of 33,730.89 and surpassing 34,000 for the first time in history. Stocks surged on the back of several factors, including strong growth in March retail sales and bond yields retreating from historical highs.

5 Quality Retail Companies Trading at Attractive GF Values
5 Quality Retail Companies Trading at Attractive GF Values

The U.S. Census Bureau said that retail and food services sales for March totaled $619.1 billion based on advanced estimates and adjusted for seasonal variation and holiday differences. The month-over-month increase of 9.8% topped the Dow Jones consensus estimate of 6.1%, while the year-over-year increase stood at 27.7%. Additionally, sales for the first quarter of 2021 increased 14.3% from first-quarter 2020 sales.

5 Quality Retail Companies Trading at Attractive GF Values
5 Quality Retail Companies Trading at Attractive GF Values

Stocks also received a boost as the 10-year Treasury Constant Maturity Rate retreated to 1.53%, down 0.11% from Wednesday's reading of 1.64%.

5 Quality Retail Companies Trading at Attractive GF Values
5 Quality Retail Companies Trading at Attractive GF Values

As retail sales surge, investors may find opportunities in the stock of retail companies that have high financial strength and profitability and are trading at attractive price-to-GF Value ratios. GuruFocus' exclusive valuation method branches from Peter Lynch's concept of comparing a company's current price to a fair-value line.

The All-in-One Screener, a Premium feature of GuruFocus, listed five retail companies that have a financial strength rank of at least 6, a profitability rank of at least 7 and a price-to-GF Value ratio between 0.6 and 1.1.

Amazon.com

Shares of Amazon.com (NASDAQ:AMZN) traded around $3,368.42, showing that the stock is fairly valued based on Thursday's price-to-GF Value ratio of 1.03.

5 Quality Retail Companies Trading at Attractive GF Values
5 Quality Retail Companies Trading at Attractive GF Values

GuruFocus ranks the Seattle-based e-commerce giant's profitability 8 out of 10 on several positive investing signs, which include a five-star business predictability rank and an operating margin that is expanding more than 20% per year on average over the past five years.

5 Quality Retail Companies Trading at Attractive GF Values
5 Quality Retail Companies Trading at Attractive GF Values

Amazon's financial strength ranks 7 out of 10 on the back of a strong Altman Z-score of 6.14 and a debt-to-Ebitda ratio that outperforms over 70% of global competitors.

5 Quality Retail Companies Trading at Attractive GF Values
5 Quality Retail Companies Trading at Attractive GF Values

Gurus with large positions in Amazon include Baillie Gifford (Trades, Portfolio) & Co., Ken Fisher (Trades, Portfolio) and Pioneer Investments (Trades, Portfolio).

5 Quality Retail Companies Trading at Attractive GF Values
5 Quality Retail Companies Trading at Attractive GF Values

Alibaba

Shares of Alibaba (NYSE:BABA) traded around $239.34, showing that the stock is significantly undervalued based on Thursday's price-to-GF Value ratio of 0.69.

5 Quality Retail Companies Trading at Attractive GF Values
5 Quality Retail Companies Trading at Attractive GF Values

GuruFocus ranks the Hangzhou, Zhejiang-based e-commerce company's profitability 8 out of 10 on several positive investing signs, which include profit margins and returns outperforming over 83% of global competitors.

5 Quality Retail Companies Trading at Attractive GF Values
5 Quality Retail Companies Trading at Attractive GF Values

Alibaba's financial strength ranks 8 out of 10, driven by a high Altman Z-score of 5.91 and debt ratios outperforming over 82% of global competitors.

5 Quality Retail Companies Trading at Attractive GF Values
5 Quality Retail Companies Trading at Attractive GF Values

Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B) Vice Chairman Charlie Munger (Trades, Portfolio) purchased during the March quarter 165,320 shares of Alibaba for his Daily Journal Corp. (NASDAQ:DJCO).

Costco

Shares of Costco (NASDAQ:COST) traded around $368.68, showing that the stock is fairly valued based on Thursday's price-to-GF Value ratio of 1.08.

5 Quality Retail Companies Trading at Attractive GF Values
5 Quality Retail Companies Trading at Attractive GF Values

GuruFocus ranks the Issaquah, Washington-based wholesale retailer's profitability 8 out of 10 on several positive investing signs, which include a five-star business predictability rank and returns that are outperforming over 83% of global competitors.

5 Quality Retail Companies Trading at Attractive GF Values
5 Quality Retail Companies Trading at Attractive GF Values

Costco's financial strength ranks 7 out of 10 on the back of interest coverage and debt ratios outperforming over 70% of global competitors, coupled with a high Altman Z-score of 6.34.

5 Quality Retail Companies Trading at Attractive GF Values
5 Quality Retail Companies Trading at Attractive GF Values

Ollie's Bargain Outlet

Shares of Ollie's Bargain Outlet (NASDAQ:OLLI) traded around $94.10, showing that the stock is modestly undervalued based on Thursday's price-to-GF Value ratio of 0.83.

5 Quality Retail Companies Trading at Attractive GF Values
5 Quality Retail Companies Trading at Attractive GF Values

The Harrisburg, Pennsylvania-based company retails brand-name houseware and furniture products at reduced prices. According to GuruFocus, the company's signs of good financial strength and profitability include expanding operating margins, a high Piotroski F-score of 7 and debt ratios outperforming over 75% of global competitors.

5 Quality Retail Companies Trading at Attractive GF Values
5 Quality Retail Companies Trading at Attractive GF Values

Weis Markets

Shares of Weis Markets (NYSE:WMK) traded around $53.84, showing that the stock is fairly valued based on Thursday's price-to-GF Value ratio of 1.04.

5 Quality Retail Companies Trading at Attractive GF Values
5 Quality Retail Companies Trading at Attractive GF Values

The Sunbury, Pennsylvania-based company retails food companies around Pennsylvania and surrounding states. GuruFocus ranks the company's profitability 7 out of 10 on several positive investing signs, which include a high Piotroski F-score of 8 and an operating margin that has increased approximately 1.1% per year over the past five years despite outperforming just over 59% of global competitors.

5 Quality Retail Companies Trading at Attractive GF Values
5 Quality Retail Companies Trading at Attractive GF Values

Disclosure: Long Alibaba and Costco.

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This article first appeared on GuruFocus.