Nordstrom, Inc. (JWN), Macy’s, Inc. (M), Dollar Tree, Inc. (DLTR) – Christmas in July: The Companies to Buy Now

The company reported strong Q1 results on May 23 with an expansion of 20 basis points in gross margin, now at 35.20%, an 18% increase to EPS, and the opening of 94 new stores. The company also announced it had repurchased 1.5 million shares. This is on top of strong Q4 results of their first $2 billion quarter, one dollar at a time. CEO Bob Sasser announced plans to expand frozen and refrigerated food offerings to 475 more stores and Canadian expansion ambitions from 140 stores currently to a possible 1,000 stores.

The company is rolling out new Deal$ stores which offer items at a discount but at more than a dollar. Sasser said it’s early days, but the Deal$ stores are doing well so far.

This is anecdotal, but if you had visited a Dollar Tree, Inc. (NASDAQ:DLTR) in the month between Black Friday and Christmas of last year, you would know this is the ditsy shopper’s store of last resort with wrapping paper, cards, little gifts, and fixings for the feast.

The holiday department store

Macy’s, Inc. (NYSE:M) is the holiday department store, the subject of films, Miracle on 34th Street and Mame, the best run of the department store sector. It continues to localize its offerings, the My Macy’s, Inc. (NYSE:M) program. It too, has the best corporate governance risk score of 1.

The company is 183 years old and based in Cincinnati, but carries the latest designers and easily outperforms department store rivals Kohl’s and J.C. Penney Company, Inc. (NYSE:JCP).

The company operates 840 Macy’s and Bloomingdale’s stores in 45 states along with rapidly growing e-commerce sites. It’s tech-friendly as last holiday season it partnered up with eBay Inc (NASDAQ:EBAY)’s PayPal with an app to help shoppers save time.

The stock is up 43.80% over the last year and is still trading at the lowest forward P/E of these three at 11, and offers a 2.10% yield at a payout ratio at 24%. It has been raising dividends with a three-year dividend growth rate of 58.62%. Macy’s has the lowest PEG and price to book at 0.87 and 3.11, respectively.

Caveat: while Macy’s, Inc. (NYSE:M) has enjoyed 36.63% EPS growth over the last three years, analysts see a 14.38% five-year EPS growth rate going forward.

Buy presents for your portfolio early

If you want growth, buy Dollar Tree, Inc. (NASDAQ:DLTR), but if you want a play on both ends of the barbell, buy Nordstrom, Inc. (NYSE:JWN). For value, put Macy’s, Inc. (NYSE:M) on your shopping list. Doesn’t your portfolio deserve a little present?

Buy retailers now before the holiday hoopla. You may be a last-minute shopper but no need to be a last-minute investor.

The article Christmas in July: The Companies to Buy Now originally appeared on Fool.com and is written by AnnaLisa Kraft.

AnnaLisa Kraft has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. AnnaLisa is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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