QVI Stock Picks Review | Q2 2024 | #2
Quality Value Investing's consumer discretionary sector updates for $TJX, $NKE, $WSM $DKS, $PAG, and $AMZN
Summary:
Quality Value Investing (QVI) reviews its six consumer discretionary sector picks’ performance, current wealth, and present value.
This report covers The TJX Companies, NIKE, Williams-Sonoma, DICK’S Sporting Goods, Penske Automotive Group, and Amazon.
The QVI Concentrated and Expanded Stock Picks Real-Time Performance Trackers reflect changes in my views (buy, hold, or sell) from this sector analysis.
When referencing this research report, access your Quality Value Investing (QVI) Glossary of Investing Terms and Metric Targets and Research Report Format Guide. Unless noted, all data presented is sourced from Seeking Alpha Premium as of the market close on May 6, 2024, and intended for illustration only.
In this series, Quality Value Investing reviews the QVI Real-Time Stock Picks by sector to update each holding’s performance, current wealth, and present value.
Today’s post reviews QVI’s six consumer discretionary sector holdings: The TJX Companies (TJX), NIKE (NKE), Williams-Sonoma (WSM), DICK’S Sporting Goods (DKS), Penske Automotive Group (PAG), and Amazon_com (AMZN).
Company Current Wealth
Value Proposition
Economic Moat
Morningstar assigns wide economic moat ratings to TJX, NIKE, and Amazon, while a narrow moat surrounds Penske. Morningstar has downgraded Williams-Sonoma and DICK’S to competitive moat ratings of none.
Value Proposition Elevator Pitches
The TJX Companies has superior inventory management, a powerhouse global buyer network, and consistent financial performance.
NIKE's Swoosh is the moat, and it's as wide as the logo is famous.
Williams-Sonoma's high-quality brand and growing omnichannel storefronts remain favorites among an affluent and loyal customer base.
DICK'S Sporting Goods is the primary sporting goods retailer in its local markets and often the only game in town.
Penske Automotive Group is a favorite among customers and employees if it is underfollowed by investors. With its highly competitive value proposition, Roger Penske’s fabulously run, enduring enterprise stands out in the crowded automotive marketplace.
Amazon enjoys retail market dominance, including the ever-growing reliance of large businesses on AWS, consumers and small businesses on Prime, and authors and book buyers on KDP.
Returns on Management
Revenue Growth and Net Profit Margins
The chart below shows that TJX Companies, Amazon, Penske Automotive, NIKE, and DICK’S Sporting Goods had double-digit three-year trailing revenue growth. Williams-Sonoma delivered a mid-single-digit topline increase, a downswing for the company.
The consumer discretionary sector had a +2.93% median revenue growth for comparison.
Williams-Sonoma, NIKE, and DICK’S (rounded up) had desirable double-digit median net profit margins in the three-year trailing period. In contrast, TJX, Penske, and Amazon had single-digit margins that are typical of retailers.
The sector had a +4.68% median net profit margin.
Next, we’ll look at each company’s returns on management and enterprise downsize risks and each stock’s present value, including shareholder yields, valuation multiples, and share price downside risks, exclusive to Quality Value Investing’s premium (paying) subscribers. The post concludes with the updated views on each covered stock.
Disclosure: I/we have beneficial long positions in the common shares of AMZN, NKE, and TJX in our family portfolio. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it other than from Substack paid subscriptions. I have no business relationship with any company whose stock is mentioned in this article.
Additional Disclosure: Quality Value Investing by David J. Waldron’s primary ticker research reports are for informational purposes only. The accuracy of the data cannot be guaranteed. Narrative and analytics are impersonal, i.e., not tailored to individual needs nor intended for portfolio construction beyond his family portfolio, which is presented solely for educational purposes. David is an individual investor and author, not an investment adviser. Readers should always engage in their own research or due diligence and consider (as appropriate) consulting a fee-only certified financial planner, licensed discount broker/dealer, flat fee registered investment adviser, certified public accountant, or specialized attorney before making any investment, income tax, or estate planning decisions.