Big Lots, Inc. (BIG): This Closeout Retailer Is a Good Buy

What I like about Big Lots, Inc. (NYSE:BIG) is its profitability, with the highest return on invested capital at 18.95%. Dollar General Corp. (NYSE:DG) ranked second with an 11.44% return on invested capital, while the return on invested capital at Target Corporation (NYSE:TGT) is only 6.28%. Income investors might like Target due to the fact that it is the only company that pays dividends among the three. Its dividend yield is around 2.5%.

My foolish take

Big Lots seems to be a good pick for long-term investors due to its low valuation, high return on invested capital, and consistent share buybacks. Instead of paying dividends, Big Lots has returned cash to its shareholders via share repurchases. If Big Lots has the same valuation as Target Corporation (NYSE:TGT), its share price should reach $50 per share–a nearly 50% premium compared to its current trading price.

Anh HOANG has no position in any stocks mentioned. The Motley Fool owns shares of Big Lots.

The article This Closeout Retailer Is a Good Buy originally appeared on Fool.com.

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