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Deutsche Goes Shopping For Discount Retailer Stocks

Deutsche Goes Shopping For Discount Retailer Stocks - Big Lots, Inc. NYSE:BIG, Dollar General Corporation NYSE:DG

Paul Trussell of Deutsche Bank took a deep dive into the "low-end" retail sector, which he argues to be "one of the healthiest groups in retail." However, the analyst pointed out that in some cases, retail names are trading near all-time highs, which creates concerns among investors moving forward.

Trussell added that he sees upside in the group as being "tempered" in the near term, but the group's "heightened" valuation could remain due to the following:

    1. Limited share loss to e-commerce players
    2. "Unique" margin profiles and levers
    3. An encouraging macro backdrop that could support momentum among the "low-end" customer base

Trussell also stated that the six stocks discussed in the group (seen below) are all trading at over a full-turn premium to their respective historical multiples on an EV/EBITDA basis and 1.9x premiums on their forward P/E.

Related Link: Cramer Shares His Concerns About Retail, And He Has A Lot To Say

Summary Of Analyst Recommendations

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DateFirmActionFromTo
Jun 2016CitigroupMaintainsBuy
Jun 2016CitigroupMaintainsBuy
Jun 2016OppenheimerInitiates Coverage onOutperform

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