In this piece, we will take a look at the 10 retail stocks to buy according to Greg Poole’s Echo Street Capital. You can skip our comprehensive analysis about Mr. Poole, his investment firm, and the bottom five companies in this list, and head on over to 5 Retail Stocks to Buy According to Greg Poole’s Echo Street Capital.
Echo Street Capital is a hedge fund based out of New York, United States. It is run by the hedge fund manager Gregory Poole, who is also the firm’s founder. Mr. Poole created the hedge fund in 2002, and since then it has grown its assets to become one of the few multi-billion dollar investment firms out there.
Mr. Poole has decades of experience in the financial industry, the bulk of which has been spent managing the affairs of his current hedge fund. He is a graduate of the University of Western Ontario in Canada, from which he received his bachelor’s degree in economics in 1996. After graduating, Mr. Poole jumped head-on into the investment industry by landing a role at the prestigious Goldman Sachs as an analyst for the bank’s real estate division. After joining, the new hedge fund executive would go on to become a portfolio manager at the bank in 2000, before setting up his own firm two years later. Since starting Echo Street Capital, Mr. Poole has seen the hedge fund grow its portfolio to sit at $14 billion as of the end of the third quarter of last year for a whopping 133% annual growth when compared to its value of $5.8 billion in Q3 2020.
While Echo Street Capital is known for its focus on the retail sector, it has also dabbled in other industries such as technology and healthcare. The firm also employs a data-intensive approach through which it determines the net value of its investments and then stores this information in an internal database to track performance for a long time period. The firm has invested in hundreds of companies, some of the most well known of which are Microsoft Corporation (NASDAQ:MSFT), PayPal Holdings, Inc. (NASDAQ:PYPL), and Mastercard Incorporated (NYSE:MA).
Photo by Tech Daily on Unsplash
Our Methodology
In order to determine which retail stocks are Mr. Poole and Echo Street’s favorites, we took a look at the fund’s 13-F filings with the SEC for the third quarter of last year. This allowed us to sift out the favorite firms, after which we analyzed them through their quarterly earnings, investor letters, analyst coverage, other large investors, and overall hedge fund sentiment gathered through Insider Monkey’s Q3 2021 survey of 867 hedge funds.
10 Retail Stocks to Buy According to Greg Poole’s Echo Street Capital
10. The Kroger Co. (NYSE:KR)
Echo Street Capital’s Stake Value: $1.2 million
Percentage of Echo Street Capital’s 13F Portfolio: 0.001%
Number of Hedge Fund Holders: 39
The Kroger Co. (NYSE:KR) is an American retailer that operates several kinds of stores. These stores cover food, medicines, department stores, and marketplaces.
Mr. Poole’s Echo Street Capital owned 30,291 The Kroger Co. (NYSE:KR) shares during the third quarter of last year. These were worth $1.2 million. Insider Monkey’s Q3 2021 research covering 867 hedge funds revealed that 39 owned a stake in the company.
The Kroger Co. (NYSE:KR) posted $31.9 billion in revenue and $0.78 in non-GAAP EPS for its fiscal Q3, beating analyst estimates for both. MKM Partners raised its price target on the stock from $44 to $48 in December 2021 and based its decision on strong Q3 earnings but cautioned that the retailer’s expenses can increase in the future if throughput slows down.
The Kroger Co. (NYSE:KR)’s largest investor is Warren Buffett’s Berkshire Hathaway who owns a whopping 61 million shares worth $2 billion.
The Kroger Co. (NYSE:KR) joins PayPal Holdings, Inc. (NASDAQ:PYPL), Microsoft Corporation (NASDAQ:MSFT), and Mastercard Incorporated (NYSE:MA) in the list of Mr. Poole’s favorite stocks.
9. Chewy, Inc. (NYSE:CHWY)
Echo Street Capital’s Stake Value: $1.2 million
Percentage of Echo Street Capital’s 13F Portfolio: 0.001%
Number of Hedge Fund Holders: 32
Chewy, Inc. (NYSE:CHWY) is an electronic commerce retailer based in the United States. The company’s retail website and mobile application allow companies to sell their pet food, supplies, and health products to consumers.
Mr. Poole’s Echo Street Capital held 18,882 Chewy, Inc. (NYSE:CHWY) shares during the third quarter of last year, for a $1.2 million stake that was a new addition to its portfolio. Insider Monkey’s Q3 2021 survey of 867 hedge funds revealed that 32 owned the company’s shares.
For its fiscal Q3, Chewy, Inc. (NYSE:CHWY) posted $2 billion in revenue and -$0.08 in GAAP EPS, meeting analyst estimates for revenue and missing them for the EPS. Citi lowered its price target to $61 from $66 in December 2021, as it adjusted for the earnings report.
Chewy, Inc. (NYSE:CHWY)’s largest investor is Nancy Zevenbergen’s Zevenbergen Capital Investments who owns 1 million shares worth $77 million.
ClearBridge Investments mentioned the company in its Q2 2021 investor letter outlining that:
“Some of our best performing holdings over the last several quarters took a pause during the strong up market in the second quarter. Chewy, Inc. (NYSE:CHWY), which gave back some gains over fears that a return of pet owners to brick-and-mortar retailers will threaten the company’s e-commerce business. We maintain confidence Chewy, Inc. (NYSE:CHWY) will be able to maintain the customer relationships it established during pandemic lockdowns as well as expand into international markets.”
8. Yum! Brands, Inc. (NYSE:YUM)
Echo Street Capital’s Stake Value: $1.3 million
Percentage of Echo Street Capital’s 13F Portfolio: 0.001%
Number of Hedge Fund Holders: 38
Yum! Brands, Inc. (NYSE:YUM) is an American fast-food retailer that is known for several renowned brands. These include the popular Kentucky Fried Chicken (KFC) fast food chain alongside Pizza Hut and Taco Bell.
Yum! Brands, Inc. (NYSE:YUM) brought in $1.6 billion in revenue and $1.22 in non-GAAP EPS for its fiscal Q3 and managed to beat analyst estimates for both. Barclays raised its price target on the stock to $140 from $133 in December 2021, basing the decision on optimism for recovery from the ongoing pandemic.
Mr. Poole’s hedge fund owned 10,757 Yum! Brands, Inc. (NYSE:YUM) shares during Q3 2021, for a $1.3 million stake which was significantly larger than the fund’s stake in the fast food retailer in the previous quarter. A third-quarter 2021 Insider Monkey survey of 867 hedge funds revealed that 38 owned the company’s shares.
Yum! Brands, Inc. (NYSE:YUM)’s largest investor is Panayotis Takis Sparaggis’ Alkeon Capital Management who owns 2.3 million shares worth $282 million.
7. Deckers Outdoor Corporation (NYSE:DECK)
Echo Street Capital’s Stake Value: $1.5 million
Percentage of Echo Street Capital’s 13F Portfolio: 0.01%
Number of Hedge Fund Holders: 48
Deckers Outdoor Corporation (NYSE:DECK) is a footwear retailer based in the United States that sells several kinds of shoes such as those for casual wear and athletic activities.
Deckers Outdoor Corporation (NYSE:DECK) earned $721 million in revenue and $3.66 in GAAP EPS for its second fiscal quarter, beating analyst estimates only for revenue. The company price target was increased by Jefferies to $525 from $475 in November 2021, owing to the strength of its brands.
During Q3 2021, Echo Street Capital owned 4,086 Deckers Outdoor Corporation (NYSE:DECK) shares for a $1.47 million stake that represented 0.01% of its portfolio. For the third quarter of last year, 48 of 867 funds polled by Insider Monkey had owned the company’s shares.
Deckers Outdoor Corporation (NYSE:DECK)’s largest investor is Robert Pitts’ Steadfast Capital Management who owns 825,423 shares worth $297 million.
6. Vistra Corp. (NYSE:VST)
Echo Street Capital’s Stake Value: $1.7 million
Percentage of Echo Street Capital’s 13F Portfolio: 0.01%
Number of Hedge Fund Holders: 41
Vistra Corp. (NYSE:VST) is an integrated retail electricity company that serves consumers in the United States. Its retail arm provides natural gas and electricity to 20 American states with millions of connections. In its third fiscal quarter, Vistra Corp. (NYSE:VST) brought in $2.99 billion in revenue and operational net income of $16 million, heavily missing analyst revenue estimates by $1.88 billion. Prior to the earnings release, BMO Capital had raised the electricity retailer’s price target to $27 from $25 in October 2021, stating that share buyback programs signaled board confidence.
Echo Street Capital owned 105,007 Vistra Corp. (NYSE:VST) shares during the third quarter of last year in a $1.7 million stake. Insider Monkey’s Q3 2021 survey of 867 hedge funds revealed that 41 owned the company’s shares. Howard Marks’ Oaktree Capital Management is Vistra Corp. (NYSE:VST)’s largest investor through a $511 million stake via 29.9 million shares.
Alongside Mastercard Incorporated (NYSE:MA), PayPal Holdings, Inc. (NASDAQ:PYPL), and Microsoft Corporation (NASDAQ:MSFT), Vistra Corp. (NYSE:VST) is a Gregory Poole favorite.
Click to continue reading and see 5 Retail Stocks to Buy According to Greg Poole’s Echo Street Capital.
Suggested Articles:
- 10 Biggest Short Squeezes of All Time
- Billionaire Julian Robertson’s Top 10 Stocks
- 15 Most Valuable Alcohol Companies
Disclosure: None. 10 Retail Stocks to Buy According to Greg Poole’s Echo Street Capital is originally published on Insider Monkey.
