Are you ready for your tax refund? Tax season closed yesterday (unless you filed an extension), and millions of Americans stand ready to get a chunk of change back from overpayments throughout the 2023 tax year. This year, the number of Americans claiming to spend their tax refunds doubled from 2022. That points, of course, to renewed consumer confidence. Likewise, many spend their tax refund cash to blow off steam, and this year has presented plenty of headaches for Americans of all types.
Despite the kickstarted consumer confidence, though, inflation is still running hot. Even as the rate of increase itself slows somewhat, prices shot up so rapidly that many haven’t yet made the mental adjustment to the new pricing paradigm. That ultimately makes discount retail companies a no-brainer for spending tax refunds — and a no-brainer for investors looking to capture tax refund opportunities with discount retail stocks.
Walmart (WMT)
Walmart (NYSE:WMT) is the obvious pick for discount retail stocks primed to capitalize on Americans’ collective tax refund. A one-stop shop, Walmart also offers check cashing and tax services that create an iterative flywheel, keeping cash within the Walmart ecosystem.
With over 11,500 stores in 27 countries, Walmart ensures strategic access for 90% of the U.S. population within 10 miles, making it a go-to option for consumers looking for budget-friendly purchases.
Walmart’s attractiveness as a discount retail stock also comes from its impressive history of dividend payments. Beginning in March 1974, with dividends at 5 cents per share, the company now offers a 1.85% total yield, reflecting an average annual growth rate of 8% over the past 50 years — a strong indication of its steady performance through diverse economic conditions.
Walmart’s ability to negotiate favorable prices from suppliers due to its vast scale allow it to pass on savings to customers, underscoring its success. Even with Amazon’s (NASDAQ:AMZN) dominance in the online market, Walmart remains a strong e-commerce competitor. The digital sales channel is expected to continue growing, especially as the summer sales season approaches.
SharkNinja (SN)
Shoppers looking to maximize their tax refund’s home appliance buying power don’t have to look much further than SharkNinja (NYSE:SN). The diversified appliance company offers higher-end products like ice cream makers and coffee machines at prices well below those of luxury and boutique brands.
SharkNinja’s stock soared since it entered the market late last summer, more than doubling its price since its debut and growing 22% since January alone. Still, with analysts setting its fair value at $67 per share, SharkNinja stock remains slightly undervalued.
Likewise, SharkNinja’s sales have remained impressively robust, even in challenging economic times, making it a perfect discount retail stock for tax refund spending. The company has consistently achieved 20% annual sales growth since 2008, with little sign of this trend decelerating. Trading below analyst estimates and at a reasonable 26x earnings valuation, SharkNinja stands out as a top discount retail stock for tax refund season.
GigaCloud Technology (GCT)
GigaCloud Technology (NASDAQ:GCT) may seem like an odd choice among discount retail stocks, but it makes sense from a wider perspective. Though the sales platform targets the B2B market, small businesses buying from its sourced vendors get their product at a discount and pass that savings down to consumers, making it part of the wider discount retail ecosystem.
Medium-sized businesses often struggle with product and inventory management, sourcing and payment processing. GigaCloud provides a comprehensive suite of scaled B2B e-commerce services, including an active vendor marketplace, shipment and freight management, warehouse storage, AI-powered fulfillment and secure cross-border payment facilitation.
Remarkably, GigaCloud’s price-to-earnings ratio stands at just 12.95, which is low compared to the tech sector’s average of 36x. That disparity becomes even more pronounced considering GigaCloud’s earnings growth. The company has doubled its earnings per share over the past four quarters while maintaining strong free cash flow per share.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.