The big box retail industry has witnessed a remarkable surge in recent years, fueled by shifting consumer preferences and technological advancements. So, investors could consider grabbing quality big box retail giants stocks Ingles Markets, Incorporated (IMKTA), Albertsons Companies, Inc. (ACI), and Tesco PLC (TSCDY) for solid gains this month.
The big box retailer industry has experienced significant growth and evolution over the years, establishing itself as a dominant force in the retail landscape. The global retail sales forecast for 2024 indicates an anticipated total of $31.10 trillion, reflecting a 4.9% annual increase. Notably, this projection represents the first occurrence of retail sales surpassing the $30 trillion milestone.
Moreover, Artificial intelligence (AI) and big data analytics are pivotal in transforming big-box retail businesses, influencing operational processes, and enhancing the customer experience. The demand for AI-enabled visual and voice search drives market growth, particularly in e-commerce and virtual shops.
Driven by the accelerating pace of digital transformation, the retail market's global Artificial Intelligence (AI) is expected to grow from $6 billion in 2023 to $85 billion in 2033, reflecting a 30.3% CAGR.
Furthermore, as convenience takes center stage in modern lifestyles, consumers are increasingly turning to digital platforms to fulfill their grocery needs. According to SkyQuest, the global online grocery market is expected to reach $2.18 trillion by 2030, growing at a CAGR of 25.3%.
Considering these conducive trends, let's take a look at the fundamentals of the three best Grocery/Big Box Retailers stocks, starting with number 3.
Stock #3: Ingles Markets, Incorporated (IMKTA)
IMKTA operates a chain of supermarkets that offers food products, including grocery, meat, and dairy products, produce, frozen foods, and other perishables, and non-food products, including fuel centers, pharmacies, health and beauty care products, general merchandise, and private label items.
IMKTA’s trailing-12-month P/S multiple of 0.27 is 75.6% lower than the industry average of 1.09. Its trailing-12-month EV/EBIT of 6.52x is 58.9% lower than the 15.88% industry average.
The company pays an annual dividend of $0.66, which translates to a yield of 0.80% on the current market price.
In the fiscal fourth quarter that ended September 30, 2023, IMKTA’s net sales stood at $1.58 billion, up 9.2% year-over-year. Its gross profit rose 1.4% from the previous-year quarter to $369.72 million. The company’s net income stood at $52.64 million and $2.77 per class A common share.
IMKTA’s shares have gained 5% over the past month to close the last trading session at $82.81.
IMKTA’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted optimally.
IMKTA also has an A grade for Value and a B for Stability and Quality. It is ranked #8 within the 38-stock A-rated Grocery/Big Box Retailers industry.
Click here for the additional POWR Ratings for Growth, Momentum, and Sentiment for IMKTA.
Stock #2: Albertsons Companies, Inc. (ACI)
ACI operates as a food and drug retailer in the United States, offering grocery products, general merchandise, pharmaceuticals, fuel, and other products. The company operates stores under multiple brand names, pharmacies, and multiple digital platforms.
ACI’s forward P/S of 0.16x is 85.8% lower than the industry average of 1.12. Its forward EV/Sales of 0.34 is 79.4% lower than the industry average of 1.65.
On November 16, 2023, ACI announced that it had partnered with Afresh Technologies, the world's leading fresh food technology company, to implement the Afresh platform across its extensive network.
By harnessing artificial intelligence at scale, Afresh's platform supports ACI in addressing the unique challenges associated with managing meat and seafood departments, particularly those related to the financial implications of shrink.
On November 14, ACI paid a cash dividend for the third quarter of fiscal 2023 of $0.12 per share of common stock. Its annual dividend of $0.48 yields 2.18% on prevailing prices. Its dividend payouts have grown at a CAGR of 68.7% over the past three years.
In the fiscal second quarter, which ended September 9, ACI’s net sales and other revenue increased 2.1% year-over-year to $18.29 billion. Its gross margin grew marginally from the year-ago value to $5.04 billion. In addition, the company registered an adjusted net income and adjusted net income per Class A common share of $367.70 million and $0.63, respectively.
Analysts expect ACI’s revenue to rise 1.2% from the previous-year quarter to $18.36 billion. Its EPS is expected to be $0.65 in the same quarter. ACI surpassed consensus revenue estimates in three of the four trailing quarters, which is impressive.
Over the past nine months, the stock has gained 10.6%, closing the last trading session at $21.98. It has gained 6% year-to-date.
ACI’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
ACI has a B grade for Value and Quality. It is ranked #7 in the same industry.
In addition to the POWR Ratings I’ve just highlighted, you can see ACI’s ratings for Growth, Momentum, Stability, and Sentiment here.
Stock #1: Tesco PLC (TSCDY)
Headquartered in Welwyn Garden City, the United Kingdom, TSCDY is a retailer that offers grocery products through its stores and online. The company also wholesales food and drink and provides banking, insurance, and mobile operating services.
TSCDY’s forward EV/Sales of 0.45x is 72.7% lower than the industry average of 1.65x. Its forward P/S multiple of 0.29 is 74.2% lower than the industry average of 1.12.
On October 30, TSCDY unveiled a festive collaboration with Dragons' Den-backed brand March Muses, introducing a new range of decorations. The company also launched a two-pack of Mini Mince Pies and reported the inclusion of the popular stationery brand Paperchase in its stores.
It pays an annual dividend of $0.41, which translates to a yield of 2.72% on the current market price.
In the 26 weeks that ended August 26, 2023, TSCDY’s revenue and adjusted operating profit stood at £34.15 billion ($37.15 billion) and £1.48 billion ($1.61 billion), up 5% and 14% year-over-year, respectively. Its adjusted EPS stood at 12.26p, up 16.8% from the previous year’s figures.
Street expects TSCDY’s EPS for the fiscal year ending February 2024 to increase 8.3% year-over-year to $0.89. Its revenue for the same year is expected to increase 5% from the previous year to $86.47 million.
The stock has gained 27.5% over the past year and 31.5% year-to-date to close the last trading session at $10.63.
TSCDY’s POWR Ratings reflect this solid outlook. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
TSCDY has an A grade for Stability and a B for Growth and Value. Within the same industry, it is ranked #5.
To see TSCDY’s Momentum, Sentiment, and Quality ratings, click here.
What To Do Next?
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TSCDY shares were trading at $10.63 per share on Monday morning, down $0.00 (0.00%). Year-to-date, TSCDY has gained 36.85%, versus a 20.46% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
Top 3 Big Box Retailer Giants to Grab Now for December Success StockNews.com
