Investing

4 Top Stocks for 2016 That Capitalize on Thrift

Rafi Farber

Published: December 22, 2015 11:05 am

Last Updated: January 13, 2020 3:48 pm

Discount retailers like Costco Wholesale Corp. (NASDAQ: COST) and Dollar Tree Inc. (NASDAQ: DLTR) have had a great 2015. Higher-priced chains like Macy’s Inc. (NYSE: M) and Whole Foods Market Inc. (NASDAQ: WFM) not so much. The trend is evidence that middle-class Americans have less money to spend and are looking for a better deal. We can expect that trend to continue in 2016.

Here are four stocks that can keep moving higher as the average American tries to get an extra mile out of every dollar.

Costco

While Costco is not going to be an explosive growth stock this coming year, it continues to prove that it can meet all challenges, at least so far. That makes it a safe place to park money at the worst, with moderate growth very possible for 2016 as more and more consumers try to stretch their wallets. Costco has the added benefit of not being branded as a poor man’s shopping center or the target of politically charged protests like Wal-Mart. Despite the good deals, it is still suitable for all income levels without the glitz, while being a comfortable all-in-one place to shop.

In 2015 we saw Costco drop very sharply to $117 a share during the August 24 market crash. It quickly sprang right back up within two weeks because it is a fundamentally sound company. Any volatility next year also can be expected to be smoothed out. This year so far has seen 12% gains despite the volatility, which is in the ballpark of what to expect in 2016.

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