We recently published a list of Top 8 Discount Stores Stocks For 2025. In this article, we are going to take a look at where PriceSmart, Inc. (NASDAQ:PSMT) stands against other top discount stores stocks for 2025.
When Donald Trump announced tariffs on China, Canada, and Mexico, stocks of most of the retail stores went down. The tariffs are likely to increase inflation and hurt the country’s economy if they continue for the duration of Trump’s term.
For investors, it is vital to keep an eye on companies that are either taking a hit on revenue directly through tariffs or losing popularity among consumers in the foreign countries involved. Some companies can take a financial hit better than others. Take for instance a company that makes branded clothing. Such a company can raise the prices of its products and its loyal consumers won’t mind. Now imagine a retail store that sells the same product. When consumers see a 10% rise in the price of the product, they blame the store, not the brand. It is the retail store that loses value in this case and that’s why the tariffs hurt them, even if they aren’t directly exposed to China.
We decided to take a look at 8 discount stores as investments in 2025. To come up with our list of 8 discount stores as investments in 2025, we only considered stocks with a market cap of at least $2 billion.
Aerial view of a large discount store showcasing its vast selection of products.
PriceSmart, Inc. (NASDAQ:PSMT)
PriceSmart Inc. (NASDAQ:PSMT) runs and manages a chain of US-style membership warehouse clubs. It offers private label and basic non-consumable and consumable products. The company provides groceries, electronics, seafood, produce, sporting goods, home furnishing products, and other products. Even though the stock gained 20% over the course of a year, there was considerable volatility along the way. This makes hunting the stock on dips an interesting exercise at these valuations for investors.
PriceSmart (NASDAQ:PSMT) is often dubbed the Costco of Central America. It has loyal customers that total 1.9 million, healthy foot traffic across its stores and is spread across the continent, though most of its stores are in Colombia, Costa Rica, and Panama.
The company has healthy gross margins of around 17%, which are made even more attractive by a membership model that allows the company to receive predictable, consistent, and recurring revenue. The quality of the management can be judged by the fact that its operations require low working capital and are well-supported by healthy cash flows. The company is a buy for anyone looking for Central America exposure while local stores in the US struggle to deal with Donald Trump’s new policies.
Overall, PSMT ranks 3rd on our list of top discount stores stocks for 2025. While we acknowledge the potential of PSMT as a leading AI investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is as promising as PSMT but that 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.