Tractor Supply Company (TSCO): A Bull Case Theory

Core Thesis - Tractor Supply Company (TSCO) is viewed as a durable and essential business with consistent demand and disciplined execution, serving rural and suburban America through a wide range of necessities [2][5] Business Model and Market Position - TSCO operates over 2,200 stores across 49 states, focusing on essential products such as feed, fencing, tools, and pet supplies, which allows it to thrive in various economic cycles [2] - The company has a strong customer base with over 30 million members in its Neighbor's Club program and a significant omnichannel presence, with 25% of sales being digitally influenced [2] Financial Performance - TSCO's revenues have doubled over the past decade to approximately $15.5 billion, with operating profits reaching nearly $5.8 billion and net income tripling to around $1.2 billion [3] - The company has demonstrated a strong dividend growth story, with 15 consecutive years of dividend increases since 2010, a more than tenfold increase in payouts, and a five-year growth rate near 28% [3] - TSCO maintains a modest payout ratio of 40% and prudent leverage, reflecting management's focus on sustainability and shareholder returns [3] Investment Appeal - With a Financial Score of 99+, TSCO ranks as one of the most dependable dividend performers in U.S. retail, classified as an "Income Eagle" with a consistent yield of 1.63% and robust dividend acceleration [4] - Although currently trading above historical valuation and sector averages, TSCO's yield exceeds its long-term norm, presenting a relatively better entry point for investors [4] - The stock has appreciated approximately 7.96% since previous bullish coverage, indicating solid fundamentals and continued investor interest [5] Hedge Fund Interest - As of the end of the second quarter, 41 hedge fund portfolios held TSCO, an increase from 37 in the previous quarter, suggesting growing interest among institutional investors [6]