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Big-Box Retailer Stocks Are Crushing the Market

By Daniel Sparks - Updated Mar 17, 2020 at 5:29PM

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Investors have a newfound appreciation for the companies the U.S. is dependent on for staple items.

Shares of the country's largest general-merchandise retailers, including Costco Wholesale (COST 1.97%), Walmart (WMT 0.08%), Target (TGT 2.46%), Kroger (KR 1.51%), and BJ's Wholesale Club (BJ 6.32%) all jumped sharply on Tuesday. Even Amazon.com (AMZN 3.58%), which doesn't have a massive physical store presence but dominates e-commerce, wasn't exempt from this group of stocks' sharp rise.

These stocks' gains came amid an upbeat day for the overall market. As of 2:30 p.m. EDT, the S&P 500 was up 5.8%. But average gain for these retailers was 8%, highlighting their relative strength.

Even more notable, these stocks have easily beat the market over the past 12 months as well.

This group's outsize gain compared to the market comes as consumers flock to grocery stores and to e-commerce giant Amazon's website in an effort to stock up on items amid the coronavirus scare.

A grocery cart in the aisle of a wholesale store

Image source: Getty Images.

Here's how these stocks were faring on Tuesday.

Stock

Intraday High

Change as of This Writing

Costco Wholesale

8.5%

7.1%

Walmart

10.7%

8.8%

Target

13.5%

9.5%

Kroger

12.2%

5.5%

BJ's Wholesale Club

16.3%

10.1%

Amazon.com

10%

6.9%

Data from intraday trading on Tuesday. Data source: Google Finance.

Good news from big retailers

As consumers stock up on food and household items to cope with the coronavirus outbreak that is shutting down many companies temporarily and is keeping consumers at home, demand from larger retailers appears to be rampant. This weekend, Amazon said it was out of stock of many household items, and it announced on Monday that it was hiring an additional 100,000 warehouse and delivery workers to help address a surge in demand. Kroger similarly announced over the weekend that it was hiring employees to help restock its shelves. 

Meanwhile, some analysts have upgraded their ratings for grocers' stocks. On Tuesday, Oppenheimer analyst Rupesh Parikh changed his rating for Walmart stock, from perform to outperform, noting that the stock gives investors a good risk-reward balance amid and a chance to outperform the broader market. Also on Tuesday, Costco and BJ's Wholesale stocks were similarly both upgraded to buy ratings by institutional investment research firm Gordon Haskett. 

Holding up exceptionally well

Unsurprisingly, all of these stocks have performed better than the overall market during this market crash. Since Feb. 19, the S&P 500 is down 26%. Yet the worst return for these large retailers over this time frame is Amazon's 16% decline. Walmart, Costco, and Target have all fallen between 1% and 12% over this same period, and Kroger and BJ's Wholesale are up 12% an 18%, respectively.

But here's what's even more impressive: All of the big-box retailers covered in this article, including Amazon, are up between 2% and 34% when zooming out to the trailing 12 months. This compares to a 12% decline for the S&P 500 during this time. These stocks are crushing the market.

The coronavirus outbreak has undoubtedly given investors more appreciation for the nation's leading retailers of household and food staples.

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Stocks Mentioned

Wal-Mart Stores, Inc. Stock Quote
Wal-Mart Stores, Inc.
WMT
$123.72 (0.08%) $0.10
Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$116.46 (3.58%) $4.02
Costco Wholesale Corporation Stock Quote
Costco Wholesale Corporation
COST
$484.37 (1.97%) $9.37
Target Corporation Stock Quote
Target Corporation
TGT
$150.42 (2.46%) $3.61
The Kroger Co. Stock Quote
The Kroger Co.
KR
$48.45 (1.51%) $0.72
BJ's Wholesale Club Holdings, Inc. Stock Quote
BJ's Wholesale Club Holdings, Inc.
BJ
$65.43 (6.32%) $3.89

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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