More than a year ago we keyed in on a trend deemed Urban Exodus. Consumers were leaving large cities in droves, in favor of smaller communities, often in Southern and Western states.
Why? More space, lower cost of living, and lower taxes…among other qualities.
Now that pandemic fears are easing and consumers are returning to “normal” life, the market is turning sour on many of these boom-time names (like Zillow, and Redfin, for instance).
And many of the major beneficiaries of this lifestyle shift are getting drug down by the broader market sell-off.
In times like this, we take notice.
With shares of both Deere and Tractor Supply dipping around -15% in the past month, is there a potential long-term opportunity for investors?
Here are 3 reasons why Deere and Tractor Supply are positioned for future growth.
The Urban Exodus is Still Underway
Consumer mentions of leaving the city in favor of a more rural environment are spiking again this Spring.
These mentions are trending +24% QoQ and +31% YoY, the largest increase since the initial covid-migration spark.
What is driving this second wave?
Aside from previously cited economic benefits, a growing number of people have realized that they can do their job from home and no longer need to live in expensive cities such as New York or Los Angeles to be near their office.
Flexible Working Models are Now Standard
According to The Atlantic, in the past three years, the net number of moves out of Manhattan has increased tenfold, with nearly 5 million Americans moving since 2020 because of remote-work opportunities.
As housing prices continue to surge and mortgage rates rise, the cost of big city living is becoming even pricier.
Despite a slide since the initial pandemic-related surge, consumer mentions of working remotely are still rising, at +44% YoY.
In addition, other flexible working models such as a hybrid workplace are soaring, pacing +87% QoQ and +213% YoY, while working as a freelancer something that is done largely remotely, is trending at +38% YoY.
These trends support a remote workforce and one that is able to live outside of large cities, acting as a significant tailwind for DE and TSCO.
DE/TSCO Demand is High, Despite Supply Chain and Inflationary Pressure
With more land to maintain, consumers are turning to products sold by Deere and Tractor supply.
While Deere is well known for its large farming equipment, it also sells products such as lawn, garden and landscaping tools.
These products help serve the everyday consumer, especially people who have made the move rurally and want to tend to their garden or land.
Demand from farmers and more traditional consumers is helping to propel DE purchase intent to an all-time high.
Tractor Supply Purchase Intent mentions are also flirting with highs, normalizing significantly higher YoY ahead of an anticipated seasonal summer uptick.
Looking ahead, watch out for some near-term pain resulting from supply chain bottlenecks and inflationary pressures. This hurt DE last week.
But more importantly, keep a close eye on consumer demand growth. If consumer mentions of shopping with DE and TSCO continue at their current rates and consumer macro trends hold, the market may be severely discounting these names.