The best investment ideas don't always have to be new ones. At times, it's useful to look at the companies you already own to determine if they qualify as attractive investment candidates. There are good reasons to do so -- first, the fact that you own it means you've already done your basic research on the company, thus saving you time and effort in scouting for new ideas. Second, it may be a good time to add on to your existing positions if they continue performing well, as this allows you to reinvest your dividends to compound your wealth over time.

One such company is Tractor Supply (TSCO 0.47%). The largest rural retail lifestyle store in the U.S. has built up a great growth track record over the years. Even during the pandemic, the business has demonstrated its resilience as it embarks on its next phase of growth.

If you already own shares in this high-quality business, here's why you should consider buying more.

Two people examining equipment at hardware store.

Image source: Getty Images.

Tractor Supply has an impressive multi-year track record

Tractor Supply's financial numbers were growing at an impressive rate even before the pandemic. The last five years have seen increases in both top and bottom lines along with margin expansion. For the first quarter of 2021, the retailer reported revenue of $2.79 billion and net income of $181.4 million.

Compare this with $1.47 billion of revenue and $67.7 million of net income in Q1 2016, and it's clear that Tractor Supply has managed to grow top line by a compound annual growth rate of 13.7% and bottom line by 21.8%. Net margin also expanded from 4.6% then to 6.5% in its latest quarter.

Over the same five-year period, Tractor Supply's number of stores has also increased from 1,521 to 1,944. The quarterly per-share dividend has more than doubled from $0.20 to $0.52, in line with the growth rate of its net income. The company has also come a long way since introducing its Neighbor's Club loyalty program in October 2015. By the time the rollout was completed in April 2017, the company had just 1 million members in the program. Fast forward four years, and membership in Neighbor's Club has ballooned to 20 million and counting.

The numbers above point to sustained growth that was unaffected by the tough conditions imposed by the pandemic. The company has successfully navigated the crisis to post sharply higher year-over-year revenue and net income for Q1 2021.

Sticky structural trends

During the company's latest conference call, CEO Hal Lawton talked about structural trends emerging that act as tailwinds to drive Tractor Supply's growth for many more years. Besides enjoying higher customer retention rates in the past 12 months, the company is also seeing a larger proportion of younger customers, with more millennials shopping in its stores.

Lawton believes that the pandemic has accelerated household formation and homeownership for this batch of customers, resulting in higher purchase activity for home improvement and household items.

Another interesting trend that will benefit the company's Petsense stores is increased pet ownership. Nearly three-quarters of Tractor Supply's customers own pets, higher than the two-thirds of U.S. households that do, while around a quarter of the company's customers had recently acquired a new pet. Pets represent recurring income for the company as customers need to spend on their upkeep.

Continuous improvements

Tractor Supply is also continually refining its strategy to enhance the appeal of its stores and products. One such initiative is the expansion of its Carhartt offering from just 10 stores to more than 100 stores by the end of 2021, with another 25 stores added next year. Carhartt is a leading workwear manufacturer that has partnered with Tractor Supply for decades by having a "shop-in-shop" concept. 

The Neighbor's Club loyalty program is also getting an upgrade, with new features and benefits being extended to all members. Points will now be awarded for every dollar spent, with more points being awarded for each higher membership tier. Benefits include birthday gifts, exclusive offers, and free same-day delivery. This is a timely move by the company, as the revamp should increase customer loyalty and encourage more frequent and repeat purchases.

Further growth expected

The company believes there is still a large total addressable market for its products. The market for rural lifestyle goods is fragmented, with Tractor Supply taking up a market share of just 10% despite being the largest player. The potential market opportunity is $110 billion, which provides significant room for the company to keep growing. With 1,944 stores at the moment, there is an opportunity to increase the number of stores to a target of 2,500 with careful site selection. 

Aside from organic growth, Tractor Supply has also explored growth through acquisitions. In September 2016, it acquired specialty pet retailer Petsense along with its 136 stores. By 2021, the number of Petsense stores has grown to 177 nationwide.

In February this year, the company announced the planned acquisition of Orscheln Farm, a farm and ranch retailer, for around $297 million. Orscheln operates 167 stores in 11 states and sells a variety of products ranging from hunting and fishing equipment to power and gardening tools. 

Investor takeaway

It seems that Tractor Supply is on track for further growth. The revamp of its loyalty program, tailwinds provided by new trends, and its recent acquisition should contribute positively to its long-term future. That suggests now might be a good time for Tractor Supply shareholders to add shares.