Tractor Supply Co. (TSCO, Nasdaq) was the only 2 for 1 split announced in July, somewhat to my surprise. With earnings coming in strong, I expected more companies to feel confident enough to announce a split. Apparently, confidence has not built up to quite that level as yet. Therefore, when a company like TSCO does take the plunge in this market environment, it deserves our very special consideration. Tractor Supply is a retailer that has carved out a solid footing in a very interesting niche. Catering to the recreational farmer and rancher, as well as to small businesses and tradesmen, it has built a network of over 900 stores in 44 states, selling everything from horse feed to welding machines to cowboy boots. I had never heard of this company, so I visited the nearest store to me, in Gilroy, CA, and was suitably impressed. It was definitely not a ‘big box’ outlet and the clean and friendly store seemed perfectly stocked for the customer living a country lifestyle. TSCO has grown from a mail-order tractor parts business started in the 1930s. It is now adding 70 to 90 stores a year to its network and plans to grow to 1800 stores. This growth is occurring with almost no long-term debt and while the company is paying a 0.8% dividend and buying back its stock. While acting like a growth company, TSCO’s stock is traded with the PE and price-to-book ratios of a value stock, and its volatility is significantly lower than the market’s. What’s not to like? I’ll be buying next week.
Neil MacNeale, 2 for 1 Stock Split Newsletter
