I've interviewed the CEO of TSCO on my radio show. He may not get the attention of his lesser-performing colleagues, but he sure impressed our listeners with what he was doing to grow his company and its share price.
But it doesn't all end with performance. Stocks also have to also make sense from a valuation standpoint. Now that doesn't mean I'm going to go eliminating biotech stocks from my list of companies I'd consider buying, but I also own boring stocks like TSCO.
The consensus analyst estimate for TSCO's earnings next year currently stand at $2.63 per share. The consensus average five-year earnings growth estimate for TSCO is 17% per year.
Given these expectations, the shares currently sport an okay PEG ratio of 1.50. PEG ratio is just one valuation measure, however.
When we take that estimate of $2.63 per share and extrapolate it out over the next five years, we come up with potential earnings per share of $4.94 five years from now.
When I apply a multiple that I think is appropriate for the shares, I come up with a five-year target price of $124 per share. With the stock currently trading at $68.27, I still see considerable upside potential.
Lastly, TSCO has a very healthy one-year stock chart. See for yourself.
Courtesy of StockCharts.com
I may have never before seen a TSCO TV commercial, ad, or even a store, but TSCO's concept has obviously worked. Of the 3,567 stocks that I track, TSCO currently comes in at Number 8. It also earns a very hard-earned grade of A+. This represents the top 3% of the entire market. I only consider stocks that have a grade of A- or better. Tractor Supply easily makes the grade.
Data from Best Stocks Now App
TSCO is for moderate risk investors. I always have a well-diversified portfolio of 25 to 30 stocks to mitigate my risk. I am also very vigilant on daily basis on the stocks that I own. At the current time, clients of Gunderson Capital Management are long the stock.
This article was written by an independent contributor, separate from TheStreet's regular news coverage.