Risks are rising for the retail sector as inflation hurts the consumer disposable income levels. Dollar General (DG) is the potential exception. The discount retailer posted strong earnings in Q1.
DG stock gained 7% last Friday after reporting GAAP EPS of $1.65. Revenue increased by 6.1% Y/Y to $9.91 billion. Theft is a major loss creator for retailers. The company increased its shrink-reduction efforts. This includes changing its self-checkout strategy. Shrink (theft) is the biggest headwind to Dollar General’s business.
Paycom Software (PAYC) continued its fade last week, closing at $145.32. Higher interest rates and slower growth will weigh on the company’s EBITDA and revenue this fiscal year.
Vistra (VST), whose stock tripled in the last year, risks pulling back further. Closing at $99.08, the stock should bounce back on Monday. The firm will strengthen its natural gas capacity in Texas. It will have 2 GW of natural gas-fired power. The firm benefits from the strong demand for gas and nuclear power plants.
In the tech sector, expect Salesforce (CRM) to continue its rebound. Shares are down 10.91% YTD after the firm posted weak Q1 results. As a Dow component, conservative investors may consider a small position in CRM stock for exposure to the high-growth tech market.
