With Student Loans Resuming, Consider these Retail Stocks

Sep 26, 2023

Over the next few days, student loan repayments will resume for about 44 million Americans.

When that happens, many could see financial strain, and potential confusion.

In fact, according to CBS News:

“The resumption of loan repayments may not only be confusing to people who had been paying off their balances prior to the pandemic, but also to young professionals who are among the four years of graduating classes who earned their degrees during the health crisis. About 20% of borrowers are those who graduated from college during the pandemic and will be new to loan repayments, noted Robert Farrington, founder of The College Investor, a personal finance site for millennials.”

We’ll also see many borrowers start to cut back on their spending. For example, according to a recent consumer poll, borrowers expect to pay $500 or less each month on discretionary items, which could be bad news for a number of retailers.

At the same time, it should boost discount retailers, like Walmart (WMT), which recently hiked its full-year earnings forecast. The company now expects to see full fiscal-year consolidated net sales growth of about 4% to 4.5%, which is above prior forecasts for 3.5%. Adjusted earnings will range between $6.36 and $6.46, which is also above expectations for $6.10 to $6.20.

TJX Companies (TJX) may benefit, too.

In its most recent quarter, the company saw fiscal second quarter EPS and revenue soar with consumers looking for hot deals. EPS came in at 85 cents, as compared to expectations for 77 cents. Revenue jumped to $12.76 billion, as compared to estimates for $12.45 billion. “Going forward, we continue to see excellent opportunities to grow sales and customer traffic, capture market share, and drive the profitability of our Company,” they added, as quoted by CNBC.

Even companies like Dollar General (DG) may do well. With a good deal of negatives priced in, and recent insider buying, keep an eye on the stock. With millions likely to cut back on spending, DG may be a good bet at recent lows. As far as the insider buying, director Timothy McGuire picked up $717,100 worth of DG stock earlier this year.

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