S&P 500   5,078.18
DOW   38,972.41
QQQ   437.60
bluebird bio stock is ripe for a 400% institutional short squeeze
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
3 lithium stocks to ride a multi-year cycle
Goldman upgraded Nvidia stock, one metric says it could go higher
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
Salesforce stock got a boost. Is it growing off the Nvidia boom?
Autozone stock price is still in the rally zone
Critical asset just had biggest fall on record (Ad)
Closing prices for crude oil, gold and other commodities
New highs are coming for Lowe’s stock despite mixed results
S&P 500   5,078.18
DOW   38,972.41
QQQ   437.60
bluebird bio stock is ripe for a 400% institutional short squeeze
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
3 lithium stocks to ride a multi-year cycle
Goldman upgraded Nvidia stock, one metric says it could go higher
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
Salesforce stock got a boost. Is it growing off the Nvidia boom?
Autozone stock price is still in the rally zone
Critical asset just had biggest fall on record (Ad)
Closing prices for crude oil, gold and other commodities
New highs are coming for Lowe’s stock despite mixed results
S&P 500   5,078.18
DOW   38,972.41
QQQ   437.60
bluebird bio stock is ripe for a 400% institutional short squeeze
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
3 lithium stocks to ride a multi-year cycle
Goldman upgraded Nvidia stock, one metric says it could go higher
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
Salesforce stock got a boost. Is it growing off the Nvidia boom?
Autozone stock price is still in the rally zone
Critical asset just had biggest fall on record (Ad)
Closing prices for crude oil, gold and other commodities
New highs are coming for Lowe’s stock despite mixed results
S&P 500   5,078.18
DOW   38,972.41
QQQ   437.60
bluebird bio stock is ripe for a 400% institutional short squeeze
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
3 lithium stocks to ride a multi-year cycle
Goldman upgraded Nvidia stock, one metric says it could go higher
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
Salesforce stock got a boost. Is it growing off the Nvidia boom?
Autozone stock price is still in the rally zone
Critical asset just had biggest fall on record (Ad)
Closing prices for crude oil, gold and other commodities
New highs are coming for Lowe’s stock despite mixed results

Retail Theft Rises: Two Ways For Investors To Beat Shrinkage

Theft prevention stocks Shrinkage, inventory shrink, it’s a growing problem today. While always present, shrinkage emerged as a growing problem early in 2023 when Target NYSE: TGT reported it as an impact on profits. That was compounded by additional comments the following quarter, commentary from other CEOs and retailers, and compounded again in Q3. Dick’s Sporting Goods NYSE: DKS shares fell more than 25% when it revealed shrinkage cut deeply into its profit, resulting in a high-double-digit (negative) revision to the earnings guidance. Shrinkage is costing retailers money, and it is a relatively untapped market. 

Key Points

  • Retail theft is on the rise and costing retailers billions. This is an investment opportunity. 
  • CDW is a leader in RFID and solutions to prevent retail theft. 
  • Avery Dennison has solutions to control shrink from the time inventory hits the dock until it leaves the store. 
  • 5 stocks we like better than Avery Dennison

The Electronic Article Surveillance market is one that we are all familiar with. Think electronic devices attached to clothing and other easy-to-steal items that trigger alarms when you walk out without paying. It was estimated to be worth $1.10 billion in early 2023, while retailers expect to lose 30X that figure in theft. 

ORC, or organized retail crime, is the biggest problem, but small-time theft if a bigger problem than ever. The rise of inflation and high interest rates are cutting consumer spending power and increasing theft. There is an opportunity here, and there is still time to get into the market. The EAS market is expected to grow at a high-single to low-double-digit CAGR for the next decade. That may be a low estimate given the recent rise in theft and does not include other anti-theft devices such as packaging and closed display cases. 

CDW Is The Largest Player With Exposure To Theft Prevention 

CDW NASDAQ: CDW is not a pure play on retail theft, but the company has extensive exposure to the retail theft industry, including RFID devices and a full stack of services. The company stock trades at roughly 21X its earnings due to its standing within the market; it is a solid dividend-paying company on track to sustain a high pace of distribution increases. The payout runs about 1.15% of the stock price, about 21X its earnings, and is a growing distribution. 

The dividend is growing at a fast pace. The 5-year CAGR is above 20%, and the company can continue to sustain a high pace if not at such lofty levels. The payout ratio is low at 23% and is backed up by solid cash flow conversion and a healthy balance sheet.

Analysts like CDW and rate the stock a Moderate Buy. The consensus rating has slipped over the last year because revenue and earnings contracted, but that trend is over. The 2023 results are coming in well above consensus, coupled with upwardly revised guidance and an outlook for a return to growth that drove a series of upward price target revisions after the Q2 release. 

Avery Dennison: End To End Solutions For Loss Prevention 

Avery Dennison NYSE: AVY has solutions to prevent loss from the time inventory is received through the point of sale. It is a smaller company by market cap than CDW but pays a better-yielding dividend. The stock trades at a similar valuation but yields 1.78% with a 40% payout ratio. Avery Dennison also increases its distribution annually at a double-digit but lower 10% pace than CDW. 

The analysts are more enthusiastic about Avery Dennison, with a Buy rating that is up from Moderate Buy earlier this year. They also see the stock moving higher, about 13%, and this is a firm target based on an outlook for double-digit revenue growth in 2024. 2024 is also expected to bring margin expansion, a 24% increase in adjusted EPS, and additional safety to the dividend.

UBS recently upgraded the stock to Buy and increased the price target above consensus. They cite strength and stabilization in core businesses and the RFID segment, which should produce market-beating growth next year. UBS expects a 14% to 15% CAGR for the next 5 years, sufficient to sustain a double-digit pace of dividend increases. 

AVY stock price chart

→ This is the #1 Stock to Buy for the AI Tidal Wave (From Chaikin Analytics) (Ad)

Should you invest $1,000 in Avery Dennison right now?

Before you consider Avery Dennison, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Avery Dennison wasn't on the list.

While Avery Dennison currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Target (TGT)
4.8215 of 5 stars
$151.99+1.2%2.89%19.39Hold$155.50
DICK'S Sporting Goods (DKS)
4.2005 of 5 stars
$177.04+0.9%2.26%15.79Hold$144.19
CDW (CDW)
4.3859 of 5 stars
$244.27-0.8%1.02%30.16Moderate Buy$223.60
Avery Dennison (AVY)
4.7263 of 5 stars
$214.13-0.1%1.51%34.48Moderate Buy$218.78
Compare These Stocks  Add These Stocks to My Watchlist 

Thomas Hughes

About Thomas Hughes

  • tmhughes.writeon@gmail.com

Contributing Author

Technical and Fundamental Analysis

Experience

Thomas Hughes has been a contributing writer for MarketBeat since 2019.

Areas of Expertise

Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies

Education

Associate of Arts in Culinary Technology

Past Experience

Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights. 


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