There are a lot of retailers competing for customers’ dollars. Investors are looking for those that are winning that battle. In the latest Good Buy or Goodbye, Washington Crossing Advisors Senior Portfolio Manager Chad Morganlander says Tractor Supply (TSCO) is worth adding to your portfolio, but Macy’s (M) is a skip.
Morganlander gives three reasons why Tractor Supply is a buy: its rising dividend, the high return on capital for its business model, and its unique positioning as a retailer that caters to farmers and more rural shoppers.
Morganlander is less of a fan of Macy’s. He doesn’t like the retailer’s debt situation, describing it as an "anchor" for the company. Morganlander also points to Macy’s revenue saying the company is "trying to rationalize their footprint and it’s like a battleship trying to make a U-turn in a closet," adding that Macy’s is struggling to find relevance in a crowded retail space. He also points to an overall slowdown in consumer spending that Macy’s may be more vulnerable to than other retailers.
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