Wal-Mart Stores, Inc. (WMT), Target Among Billionaire Ray Dalio’s Retail Bets

Dollar Tree, Inc. (NASDAQ:DLTR) is a discount retailer that trades on the cheap end of the industry at only 16x earnings. Same store sales growth is expected to be 3% in FY2014 and 4% in FY2013, where sales should be driven higher on the addition of refrigerated and frozen foods. The discount retailer also plans to grow square footage by 7% through FY2014, thanks to growth in consumables. This should help further drive sales due to weak economic pressure, which will further lead to trade downs. Jim Simons is one of Dollar Tree’s big-name investors (check out Jim Simons’ top picks).

Macy’s Inc. (NYSE:M) is another one of Dalio’s retail picks, and a high-end one at that. Sales are expected to be up 2% in FY2014, being driven by solid growth and demand from its high-end customers. The affluent customer base of Macy’s and Bloomingdale’s has allowed the retailer to hold up relatively well – up close to 20% in 2012. It also appears that same store growth should be robust over the interim, expected to be up 3% in FY2013 and 4% in FY2014. Macy’s also trades on the low end at 12x earnings when compared to other major peers, namely Saks (23x) and Nordstrom (16x). Steven Cohen of SAC Capital was upping his stake of Macy’s by 170% last quarter (check out Steven Cohen’s top picks).

In short, we see the depressed retail segment as presenting solid investment opportunities. Two of the top global retailers Wal-Mart and Target are part of Dalio and many other billionaires’ portfolios, but TJX is a lesser known pick. Macy’s and Dollar Tree should see solid growth thanks to their specialized customer bases. For more related coverage, continue reading below:

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