How Tractor Supply could ride 'egg-flation' wave
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Director and Senior Analyst at Mizuho Americas David Bellinger joins Market Domination hosts Josh Lipton and Julie Hyman to share insights on stocks like Home Depot, Lowe's (LOW), and Tractor Supply (TSCO).
He highlights Tractor Supply’s “Chick Days” promotion, a potential benefit in light of current egg price trends.
"So all this egg-flation hysteria that's out there, you don't think Tractor Supply is the beneficiary right away. But, when you peel it back, we think they're going to have a nice Q1, Q2 here because of this dynamic," Bellinger says.
"What it does, it gets you in the store. It gets a lot of new traffic. You do have people who are latching on to this backyard chicken craze and trying to get their own eggs," he adds.
Bellinger credits the promotion’s success, saying, "We think it's coming, but we do still think it's sort of this sneaky positive for the business."
To watch more expert insights and analysis on the latest market action, check out more Market Domination here.
So, you've got a buy equivalent rating on Home Depot, you've got a buy equivalent rating on Lowe's, and you've got a buy equivalent rating on Tractor Supply. David, I'm so excited to talk to you about eggs, which is the topic du jour. Um, and apparently it's chick season. Uh, I guess we're coming into chick season here at Tractor Supply. I did not know this. People buy laying hens at Tractor Supply, I guess, or specifically they buy chicks that grow into laying hens. And I guess people are gonna want to have their own egg sources right now. Talk me through this.
Yeah, thanks for bringing this up. It's a great question. And we think, uh, under the radar positive for Tractor Supply. So, all this egflation hysteria that's out there, you don't think Tractor Supply is the beneficiary right away, but when you peel it back, we think they're gonna have a nice Q1, Q2 here because of this dynamic. They basically do this Chick Days promotion. So you can go in the store, or you can buy some baby chicks. They're a couple bucks each, two, four, five dollars. But what it does, it gets you in the store, it gets a lot of new traffic. You do have people who are latching on to this backyard chicken craze and try to get their own eggs, avoid these retail prices. Talking about five dollars for a dozen eggs or more is is a lot, right? So, if if you can get around that, it's a nice positive. But then these customers are spending on other items, right? You're buying a potentially two, three, $400 chicken coop, you're buying feed, you're buying, uh, heating lamps. There's all these other pieces that go along with it. So they saw this dynamic back in Q2 of '20, when you had one of the initial egg price spikes. So we we think it's coming again. We were at the store this past weekend in Northern New Jersey, one of my daughters, no chickens left. Sold out of a few hundred chickens immediately. So we think that's a good sign, and we got a lot of good feedback on our report about egflation and Tractor Supply. We think it's coming, but we do still think it's sort of this sneaky positive for the business.
Chick Days.
Chick Days, there it is. David, thank you so much for your time, those stock picks. Appreciate it.
Thank you.
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This post was written by Josh Lynch