BJ’s Wholesale Club is a Quad 4 outperformer on an absolute and relative basis. Our macro team has increased the probability of Quad 4 for the next three quarters as time has progressed. It likely takes inflation and growth (as well as employment) to decelerate faster than expected to avoid a Quad 4 environment in 2023. The economic data to be reported seems increasingly unlikely to alter the Fed’s path of tightening.
Our investment themes for the presentation:
Food retailers benefited from the shift to at-home consumption during the pandemic. Just as COVID-19 restrictions were finally being lifted throughout the country and consumers were resuming their lives, food inflation and soaring gasoline prices have altered their behavior again. BJ’s Wholesale Club’s value proposition is positioned to gain share as consumers look to stretch their food budgets. BJ’s is an attractive capital preservation long for the quad environment with the highest probability of occurring. We see upside potential in both EPS estimates and the multiple as the company takes share and accelerates new store openings. We are currently long Grocery Outlet and BJs in food retail and short Kroger, Albertsons, Loblaw, and Sprouts Farmers Market.
We are presenting our BJ’s Wholesale Club Black Book on Wednesday, July 20th at 2 PM ET. We will update food retail industry trends, make our case for warehouse clubs gaining share within food retail, and examine new store performance to see if the company should accelerate store growth. Stay tuned for additional details.
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CLICK HERE at the time of the event for the live webcast and materials. |
