We recently compiled a list of the 8 High Growth Retail Stocks That Are Profitable in 2024. In this article, we are going to take a look at where Casey’s General Stores, Inc. (NASDAQ:CASY) stands against the other high growth retail stocks.

Lift in US Retail Sales due to Discretionary Spending

US retail sales increased solidly in September, supporting the view that the US economy possibly maintained a strong growth pace in Q3. Sales growth surpassed forecasts with an increase of 0.4%. A so-called control group of core sales jumped 0.7%. On October 18, James Knightley, chief international economist at ING, appeared on Reuters to talk about the retail sales growth. He said that a number of things are happening in the sector, with the key story being the remarkable resilience showed by the US consumer despite concerns about the job market cooling, high borrowing costs, and savings being exhausted. It looks as if the economy is on track to record a second consecutive 3% growth rate in this current quarter.

However, concerns that disproportionately high spending by higher-income groups is offsetting weaker spending by lower-income households are rising. The top 20% of the American households spend more in dollar terms as compared to the bottom 60% of the households by income. For the people in the top 20%, everything that could go right is going right. However, lower-income households have several pressures weighing them down, with inflation being a constraint.

This divergence in the household performance is a key story in the sector, with experts looking at how long high-income households can continue to offset the intensifying weakness in the lower-income sector. Knightley says that hiring does appear to be slowing in the job market, with jobless claims apparently being on the rise. These factors point to an intensification in the job market slowdown. If that is the case, it is expected to put more and more pressure on the bottom 60% of the households. If these households begin to fear the risk of rising joblessness, then that can be more of a headwind for economic activity felt more broadly.

All in all, it appears to be a mixed picture for the Fed. Being in the middle of the Q3 earnings season, Knightley gives an outlook on future earnings growth and says that it appears that the economy is performing pretty robustly despite headwinds. However, he also says that it is important to note that the equity market looks towards the future at all times, and that the Fed cuts rates for a reason. He feels as if a cooling is coming through, and that the earning estimates in the coming quarters might be even softer than what we are seeing in Q3. He thus think that the pressure is going to be much more telling for US corporate moving through Q4 and through next year.

A Concentrated Consumer or Slowing Consumer?

On August 21, Matt Boss, JPMorgan retail analyst, appeared on ‘Closing Bell’ to discuss the retail sector and the state of the consumer. He said that seeing from the backdrop of the consumer, we are witnessing a concentrated consumer instead of a slowing consumer across the spending front. Consumers are concentrating on events, such as the Back to School season experiencing accelerated traffic in consumers in that segment. Boss also said that the consumer is concentrating on value, highlighting the need for value in brick-and-mortar to offset convenience.

With consumer concentration directed towards key catalysts or holiday shopping periods, trends may show higher “peaks” and greater “lulls” of spending in between catalysts. Consumer shopping is coming up in several different ways, which he considers a by-product of COVID-19. However, Boss says that the reality is that consumer spending remains stable.

He believes that retail stocks that deliver value and have brands that consumers want in convenient settings are likely to experience higher consumer engagement and exhibit signs of consumer stability. Boss’ playbook for growth in the retail segment for the back half of 2024 thus includes innovation, differentiated product, value, and convenience in the e-commerce front.

In his optimism across the sector, Boss sees more winners than losers within the department store and specialty segment. He also believes that the consumer has been in a selective recession, with the low-income consumer being under immense pressure. The high-income and middle-income consumers remain plentiful on the spending side.

Our Methodology

To compile the list of 8 high growth retail stocks that are profitable in 2024, we used the Finviz stock screener, Yahoo Finance, and Seeking Alpha. Using the screener, we compiled an initial list of 40 retail stocks with 5 years of positive sales growth (at least high single digits). Next, using Yahoo Finance and Seeking Alpha, we sourced the 5-year net income and revenue growth rates along with the TTM net income (at least $100 million) to ensure profitability in 2024. Lastly, we ranked our stocks based on the number of hedge fund holders in Q2 2024 as per Insider Monkey’s database. The list is ranked in ascending order of the number of hedge fund holders.

Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

Casey’s General Stores, Inc. (NASDAQ:CASY)

5-Year Net Income Growth: 18.50%

5-Year Revenue Growth: 12.47%

TTM Net Income: $512.93 million 

Number of Hedge Funds as of Q2 2024: 42

Casey’s General Stores (NASDAQ:CASY) is a convenience retailer that operates convenience stores in 17 states under the names Casey’s and Casey’s General Store. It offers a broad merchandise range, including food items, tobacco and nicotine products, health and beauty aids, nonfood items, automotive products, and more. It operates more than 2,600 convenience stores, and boasts popular brands such as Lone Star Food Store and GoodStop.

It generated $180 million in net income, undergoing a 6% increase in Q1 2025. The company’s EBITDA also grew by 9% compared to the prior year, reaching $346 million. Q1 2025 was another great quarter for the company, highlighting its strong business model. It expanded gross profit dollars while growing its store base.

The company also saw continued strength with its prepared food innovation and margin expansion inside the store. This was primarily driven by the general merchandise and grocery category. These positive results show that the company’s three-year strategic plan is credible and achievable.

In addition, Casey’s General Stores (NASDAQ:CASY) has a strong balance sheet, allowing it to continue with its pending acquisition of Fikes. Overall, the company is seeing positive momentum in its offerings, especially in non-alcoholic and alcoholic beverages, including liquor. Its 1,500 liquor licenses give it a strategic advantage.

It now expects store growth to reach around 270 units for the fiscal year, up from its previously disclosed 100 units. The company takes the fifth spot on our list of the 8 high growth retail stocks that are profitable in 2024. ClearBridge SMID Cap Growth Strategy stated the following regarding Casey’s General Stores, Inc. (NASDAQ:CASY) in its Q2 2024 investor letter:

“Stock selection in the consumer staples sector also proved beneficial, primarily driven by our holdings in Casey’s General Stores, Inc. (NASDAQ:CASY) and BJ’s Wholesale Club (BJ). An operator of gas stations and convenience stores, Casey’s is now reaping the rewards of its aggressive reinvestment in its stores over the past decade, building its private label brand and broadening its product offerings. This has not only helped boost same-store sales but also encouraged repeat traffic, allowing the company to buck broader industry trends toward contraction in gas volumes and margins. Finally, the company’s strategy of choosing locations in smaller and more remote markets has afforded it stronger pricing power.”

Overall CASY ranks 5th on our list of the high growth retail stocks that are profitable in 2024. While we acknowledge the potential of CASY as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CASY but trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.