For his second Executive Decision segment of "Mad Money" Monday, Jim Cramer spoke with Hal Lawton, president and CEO of Tractor Supply Co. (TSCO) , a agriculture-focused and rural lifestyle retailer that is seeing its shares currently trade for 26x earnings.
Lawton admitted that Tractor Supply may not be a household name, but he noted that his company has more than 1,900 locations nationwide, 30% same-store sales growth and more than 20 million loyalty members.
When asked about growth, Lawton said the company is seeing strength in core customers but also in a whole new generation of younger customers who are embracing a rural, self-reliant lifestyle. Cramer called Tractor Supply one of the most important retailers in the country.
Let's take a trip to our Tractor Supply charts. The last time we reviewed the charts was way back on July 21, 2020, when we wrote, "I would want to be a buyer of TSCO, but the question is where and what to risk. If you are willing to risk a close below $130 I could say go long at current levels."
In this updated daily bar chart of TSCO, below, we can see that prices corrected lower into November and prices approached the rising 200-day moving average line. In hindsight this was a buying opportunity. Prices are trading above the rising 50-day moving average line and the 200-day line too. The On-Balance-Volume (OBV) line has been climbing higher the past 12 months and confirms and supports the price gains. The Moving Average Convergence Divergence (MACD) oscillator just crossed to the upside for a fresh outright buy signal.
In this Japanese candlestick chart of TSCO, below, we see a strong rally underway. Prices are up three-fold from their March 2020 nadir. The slope of the 40-week moving average line is positive. The weekly OBV line shows a rise to new highs to tell us that buyers are more aggressive. The MACD oscillator is in a clear bullish alignment above the zero line.
In this daily Point and Figure chart of TSCO, below, we can see an upside price target of $222.
In this weekly Point and Figure chart of TSCO, below, we used close-only prices with a five-box reversal filter and traditional even-dollar scaling. Here the chart produces a price target in the $261 area.
Bottom line strategy: I live in an area of New Jersey that has a lot of protected farmland and large homesteads. There is a Tractor Supply store less than three miles from my house and I have shopped there many times and I have to say they are busy. (Shout out to Peter Lynch.) Traders should continue to hold existing TSCO longs and consider adding to those positions at current levels. Raise sell stops to $170 from below $130. The $222 area and then the $261 area are our price objectives for now.
