Why Shares of Discount Retailers Were Up Today
Shares of discount retailers got a boost Monday after weekend headlines that at least offer a glimmer of hope that the U.S. could be turning a corner in its fight against COVID-19. We're still far from a solution to the pandemic, and it seems likely the U.S. economy will end up in a recession even after the virus is contained, but discounters are likely to hold up better than most when the shelter-in-place restrictions do come to an end.
Shares of Five Below (NASDAQ: FIVE) and The TJX Companies (NYSE: TJX) each closed up more than 12% on Monday, while shares of Dollar Tree (NASDAQ: DLTR) were up 8% and Dollar General (NYSE: DG) closed up 4.5%.
Retailers, including discounters, have been hit hard by the pandemic response, which has limited consumer traffic in their stores and has caused households to cut spending. But these businesses, and in particular the dollar stores, are textbook defensive stocks for a recession, and if the U.S. economy comes out of the pandemic wounded, as expected, these businesses should be able to do well in the quarters that follow.
Source Fool.com
