This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

4 Stock Strategies From Wall Street: Feb. 3


NEW YORK (TheStreet) -- In today's daily series of investing strategies from Wall Street, analysts focus on the defensive traits of dollar-store stocks in this period of rising gasoline prices.

1. Dollar Stores Make Good Defensive Stocks Amid High Gasoline Prices

As gasoline prices continue to rise, the first assumption that many investors might make about dollar stores is that they will take a hit, with their core, lower income customers tightening purse strings to cope with the elevated fuel costs. However, Guggenheim analysts say that this assumption is flawed.

Using detailed "regression analysis," the researchers are deducing that dollar store same-store sales will actually receive a boost in this environment, as they incrementally pick up higher-income customers looking to spend more economically. From this perspective, stocks such as Family Dollar (FDO), Dollar Tree (DLTR) and 99 Cents Only Store (NDN) could actually serve as defensive names in a stressful spending environment. The average retail price of gasoline is now up 9.4% from a year ago at $3.39 a gallon, according to the latest MasterCard SpendingPulse report, which also factors in cash and check usages.

As for drug retailers such as Walgreen (WAG), investors might assume that these stocks could benefit from the physical convenience of their stores at a time when the average consumer may want to cut down on travel. However, Guggenheim analysts caution that the convenience edge of drug retailers in general could be offset by their higher prices -- roughly 25% above Wal-Mart's (WMT), for instance.

Guggenheim researchers say that it's not unreasonable to assume that gasoline prices could soar towards the $4 psychological mark later this year given that historically, prices have been able to rise as much as 15% to 20% in the weeks between January and the May Memorial Day holiday weekend.

1 of 4

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,098.45 +18.88 0.11%
S&P 500 2,003.37 +6.63 0.33%
NASDAQ 4,580.2710 +22.5760 0.50%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs