3 Big Box Retail Stocks Connecting Investors to Weekly Holiday Gains

As the holiday season approaches, retail sales are anticipated to increase due to alleviating inflation, strong consumer spending, and a growing preference for online shopping. Therefore, it could be prudent to buy fundamentally strong big box retailer stocks — Weis Markets, Inc. (WMK), George Weston Limited (WNGRF), and Casey's General Stores, Inc. (CASY).

Before diving deeper into the fundamentals of these stocks, let’s discuss what’s shaping the prospects of the big-box retail industry.

Retail spending suffered in October as interest rates have been at a 22-year high. Although retail sales declined 0.1% sequentially, it was less than economists had expected. On the other hand, retail sales rose 2.5% year-over-year to $705 billion in October. Total sales from August 2023 through October 2023 were up 3.1%.

October’s inflation numbers were below Wall Street estimates, remaining flat sequentially and rising 3.2% year-over-year. The unemployment rate was 3.9% in October, marking the 21st straight month of the jobless rate remaining below 4%. The easing inflation and low unemployment figures bode well for retail sales, as consumer spending will likely remain robust.

The National Retail Federation has forecast that holiday spending is expected to reach record levels during November and December and will grow between 3% and 4% year-over-year to between $957.30 billion and $966.60 billion. NRF President and CEO Matthew Shay said, “Overall household finances remain in good shape and will continue to support the consumer’s ability to spend.”

Moreover, with the easing of supply chains, the availability of an omnichannel experience, the ability to shop online, and the growing use of artificial intelligence and automation, the big box retail industry is well-positioned for long-term growth. Global retail sales in 2024 are expected to reach $31.10 trillion, representing an increase of 4.9% year-over-year. This will also mark retail sales crossing the $30 trillion mark for the first time.

In light of these encouraging trends, let’s look at the fundamentals of the three Grocery/Big Box Retailers stocks, beginning with number 3.

Stock #3: Weis Markets, Inc. (WMK)

WMK is a food retailer that engages in the retail sale of food through a chain of supermarkets. The company operates primarily under the Weis Markets name and Weis, Weis 2 Go, Weis Great Meals Start Here, Weis Gas-n-Go, and Weis Nutri-Facts brands. Its retail food stores sell groceries, dairy products, frozen foods, meats, seafood, fresh produce, floral, pharmacy services, deli products, prepared foods, bakery products, etc.

On November 9, 2023, WMT announced that it had completed the major remodel of its store in Hanover, PA. WMK’s Vice President of Marketing and Advertising, Maria Rizzo, said, “We’re excited to expand our commitment to the Hanover community with these store enhancements, which will allow for an expanded variety and an improved shopping experience.”

In terms of the trailing-12-month Return on Total Assets, WMK’s 5.80% is 20% higher than the 4.83% industry average. Furthermore, the stock’s 2.47x trailing-12-month asset turnover ratio is 196% higher than the industry average of 0.84x.

For the third quarter ended September 30, 2023, WMK’s net sales increased 0.8% year-over-year to $1.16 billion. Its comparable store sales rose 0.8% year-over-year. The company’s net income came in at $23.23 million. In addition, its EPS stood at $0.86.

Over the past three months, the stock has declined 0.6% to close the last trading session at $63.45.

It’s no surprise that WMK has an overall rating of B, which translates to a Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

It is ranked #24 out of 38 stocks in the A-rated Grocery/Big Box Retailers industry. It has a B grade for Stability and Quality. Click here for WMK’s additional ratings for Growth, Value, Momentum, and Sentiment.

Stock #2: George Weston Limited (WNGRF)

Headquartered in Toronto, Canada, WNGRF provides food and drug retailing and financial services in Canada and internationally. The company operates through two segments: Loblaw Companies Limited (Loblaw) and Choice Properties Real Estate Investment Trust (Choice Properties).

In terms of the trailing-12-month Return on Common Equity, WNGRF’s 22.15% is 89.6% higher than the 11.68% industry average. Likewise, its 3.40% trailing-12-month Capex/Sales is 5.6% higher than the industry average of 3.22%. Furthermore, the stock’s 1.22x trailing-12-month asset turnover ratio is 46.6% higher than the industry average of 0.84x.

WNGRF’s revenue for the third quarter ended October 7, 2023, increased 5.1% year-over-year to $18.41 billion. Its operating income came in at $1.23 million. The company’s adjusted EBITDA increased 3.5% year-over-year to $2.02 billion.

In addition, its adjusted net earnings available to common shareholders from continuing operations rose 2.9% over the prior-year quarter to $466 million. Also, its adjusted EPS from continuing operations came in at $3.36, representing an increase of 7.7% year-over-year.

Street expects WNGRF’s revenue for the quarter ending December 2023 to increase 2.9% year-over-year to $10.70 billion. Over the past three months, the stock has gained 6.1% to close the last trading session at $118.34.

WNGRF’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which translates to a Buy in our proprietary rating system.

Within the same industry, it is ranked #15. It has a B grade for Stability and Quality. To see the other ratings of WNGRF for Growth, Value, Momentum, and Sentiment, click here.

Stock #1: Casey's General Stores, Inc. (CASY)

CASY operates convenience stores under the Casey’s and Casey’s General Store names. Its stores offer pizza, donuts, breakfast items, sandwiches, and tobacco and nicotine products. The company’s stores provide soft drinks, energy, water, sports drinks, juices, coffee, tea and dairy products, beer, wine, and spirits, snacks, candy, packaged bakery, ice cream, meals, and appetizers, health and beauty aids, automotive products, etc.

On August 15, 2023, CASY announced that it would acquire 63 convenience stores from EG America, LLC, a subsidiary of EG Group Ltd. The stores are located in Kentucky and Tennessee which are currently operating under the Minit Mart and Certified Oil banners. The deal is expected to close later this year.

CASY’s President and CEO Darren Rebelez said, “One of the key pillars in our strategic plan is to accelerate our store growth over the next three years and bring Casey’s to more communities. This opportunity is an excellent strategic fit as we look to add locations in Kentucky and Tennessee, which are both within our existing distribution footprint.”

“We look forward to serving more guests in these markets and welcoming the team members from this transaction into the Casey’s family,” he added.

In terms of the trailing-12-month Return on Common Equity, CASY’s 17.96% is 53.8% higher than the 11.68% industry average. Likewise, its 7.64% trailing-12-month Return on Total Assets is 58% higher than the industry average of 4.83%. Furthermore, the stock’s 2.47x trailing-12-month asset turnover ratio is 195.9% higher than the industry average of 0.84x.

For the fiscal first quarter, which ended July 31, 2023, CASY’s total revenue came in at $3.87 billion. Its gross profit rose 5% year-over-year to $877.75 million. The company’s adjusted EBITDA increased 7.6% over the prior-year quarter to $315.45 million. In addition, its net income increased 10.7% year-over-year to $169.24 million. Also, its EPS came in at $4.52, representing an increase of 10.5% year-over-year.

For the quarter ended October 31, 2023, CASY’s EPS is expected to increase marginally year-over-year to $3.67. Its revenue for the same quarter is expected to increase 2% year-over-year to $4.06 billion. It surpassed the consensus EPS estimates in three of the trailing four quarters. Over the past nine months, the stock has gained 31% to close the last trading session at $274.65.

CASY’s positive outlook is reflected in its POWR Ratings. It has an overall rating of A, equating to a Strong Buy in our proprietary rating system. 

It is ranked #9 in the Grocery/Big Box Retailers industry. It has an A grade for Sentiment and a B for Quality. Click here to see the additional ratings of CASY for Growth, Value, Momentum, and Stability.

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WNGRF shares were trading at $119.95 per share on Friday morning, up $1.61 (+1.36%). Year-to-date, WNGRF has declined -2.35%, versus a 21.32% rise in the benchmark S&P 500 index during the same period.

Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.

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