Investing is about putting money to work for the long haul. However, it's also earnings season. If you're going to invest you may as well make some timely picks ahead of companies that have strong near-term prospects to deliver market-thumping gains.
I'm looking at two companies that are scheduled to report fresh quarterly results later this week -- as well as an ETF I like -- that could be smart places to park your next $1,000. Tractor Supply (NASDAQ:TSCO) and Cleveland-Cliffs (NYSE:CLF) are the stocks that will be stepping up with financial updates near the end of this week. Vanguard Small-Cap Value (NYSEMKT:VBR) is the exchange-trade fund that I like here.
The perfect storm of the suburbanization movement and the boom in recreational farming has made Tractor Supply a thinking investor's play on the pandemic. The growing retailer of farming tools, pet feed, and livestock supplies has been booming since the COVID-19 crisis. Revenue rose 27% last year -- after years of steady single-digit growth -- and Tractor Supply's top line is up another 25% through the first half of this year.
Analysts see net sales rising 19% when Tractor Supply reports on Thursday morning. Expansion and the continuing pop in store-level comps should drive another strong performance. Wall Street pros see a more modest year-over-year gain on the bottom line, but that's not a deal breaker. Tractor Supply has easily landed ahead of Wall Street pro profit projections, beating expectations by 8% to 62% over the the past four reports.
Even now when folks are returning to work we're not going to lose the hobby-farm trend. Tractor Supply jacked up its guidance when it last reported three months ago, and that's been par for the course in the retailer's rise. The stock has more than doubled since the start of last year, and the soil is still fertile here for investors planting seeds for the future.
If Tractor Supply has trounced Wall Street profit targets with ease lately Cleveland-Cliffs is at the other end of the spectrum. It has fallen woefully short of analyst earnings estimates for three consecutive quarters, even as the top line bursts skyward.
Cleveland-Cliffs is a vertically integrated producer of flat-rolled steel, and it's been opportunistically buying attractively priced players to expand its reach. Last week investors cheered news that it would be acquiring Ferrous Processing and Trading, a metal recycler that signals Cleveland-Cliffs' entry into the scrap metal market.
Steel prices have skyrocketed, and profitability has followed suit. Cleveland-Cliffs is trading for less than four times this year's projected earnings. This is a cyclical business, but with steel in high demand between the housing boom, vehicle purchases, and future spending on U.S. infrastructure the prospects are bright for Cleveland-Cliffs. It may have missed analyst forecasts on the bottom line lately, but estimates are inching higher ahead of this week's financial update.
Vanguard Small-Cap Value
Exchange-traded funds -- or ETFs -- are a great way to buy a basket of stocks with a single investment of any size. Vanguard is known for its low-cost index funds, putting more of your money to work in the market.
Vanguard Small-Cap Value invests in nearly 1,000 stocks with market caps below $2 billion that offer lower valuations and growth rates than the overall universe of small-cap stocks. As a growth investor I don't typically approach the realm of small companies with an eye for value, and this ETF gives me some skin in that game. Vanguard's net expense ratio is so low -- at 0.07% -- that there's even room for a 1.5% yield that gets sliced out quarterly.
I like Tractor Supply, Cleveland-Cliffs, and Vanguard Small-Cap Value as investments to consider for your next $1,000. They are scratching entirely different itches in the market, but that's also pretty much the point of diversification.