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Consider Spending Your Stimulus Check on These Bargain Stocks

By Daniel B. Kline – Apr 7, 2020 at 6:09AM

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If you don't need the money for living expenses, investing can be a smart idea.

Some of us work in industries that have not been impacted by the coronavirus. That's something to feel very fortunate about -- and if you're in that group, make sure to do what you can for people who are not as lucky. Help friends and family members. Make donations to food banks, shelters, and those in need. Be creative and try to have as much impact as you can, because you never know when something else will happen that puts you in a situation where you need a helping hand.

If your finances are still healthy, though, you may consider using part (or all) of your stimulus check for investing. There are some great bargains you can buy -- companies that may not be getting hurt now, even if their stock price says otherwise.

Three women in a TJX store.

TJX has closed all its locations for now, Image source: TJX.

1. TJX Companies

TJX Companies (TJX 1.27%) made the decision to close all of its stores in the U.S. Canada, Europe, and Australia for two weeks as of March 19. Those closures seem likely to be extended in most, if not all, of those countries.

The company will absolutely have a rough quarter, and it has pulled its 2021 guidance. When it can reopen, however, the discount chain will be well-positioned. People will be looking for bargains, and Marshalls, TJ Maxx, HomeGoods, and the company's other brands will be able to make good deals with distributors stuck with orders canceled by brands on less solid financial footing.

TJX closed April 3 at $40.96, down from its 52-week high of $64.95.

2. Domino's

Domino's (DPZ -1.94%) saw its growth slow in March as a small number of stores were forced to close globally due to COVID-19. Ultimately, though, the pizza chain mostly operates as solely a delivery and pickup business that's very technology-driven, allowing customers to track the progress of their orders.

The chain may see its sales increase while people are forced to stay in place, and that should help it grow its customer base. Domino's stock has fared decently, but it was trading at $328.23 at market close on April 3, down from a 52-week high of $381.86.

This pandemic will almost certainly cause some restaurant chains and local eateries to close their doors for good. As an inexpensive meal that's really convenient, Domino' stands ready to pick up business, even when the world returns to normal. 

3. Ollie's Bargain Outlet

Ollie's Bargain Outlet (OLLI 0.25%) has kept its stores open during the coronavirus pandemic, shifting its buying to meet the logical shift of demand "toward essential products" according to CEO John Swygert in the chain's fourth-quarter earnings release.

"We are leveraging the agility of our buying team to hone in on these categories and to offer great deals," he added.

Like TJX, Ollie's should be able to get some better-than-usual deals and merchandise for its customers when the current situation ends. It may also add customers, as people who might otherwise not have considered shopping there check out its eclectic mix of merchandise.

Ollie's, which reported a net sales increase of 7.2% and a comparable-store increase of 4.9% in Q4, saw its shares close April 3 at $44.59. That's less than half their 52-week high of $103.03.

Look for bargains

Share prices may not recover quickly, even for companies that see sales stay the same or even rise during the impacted period. Buying any stocks right now likely requires patience. If you're willing to be a long-term investor and look for well-run companies with strong foundations, loyal customer bases, and good leadership, then you can put your stimulus check (and any money you had set aside for investing) to very good use during this down period.

Daniel B. Kline has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Ollies Bargain Outlet Holdings. The Motley Fool recommends The TJX Companies. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Domino's Pizza, Inc. Stock Quote
Domino's Pizza, Inc.
DPZ
$310.20 (-1.94%) $-6.15
The TJX Companies, Inc. Stock Quote
The TJX Companies, Inc.
TJX
$62.12 (1.27%) $0.78
Ollie's Bargain Outlet Holdings, Inc. Stock Quote
Ollie's Bargain Outlet Holdings, Inc.
OLLI
$51.60 (0.25%) $0.13

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

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