Using LikeFolio's Outlier Discovery Grid to spot under the radar opportunities
May 21, 2021
At LikeFolio, we have a simple “1-2 punch” that has led to us spotting powerful, and some extremely profitable, investment opportunities.
Here it is:
1. Identify a major consumer trend.
2. Figure out which companies are best positioned to take advantage of the trend.
Makes sense, right?
Today I want to walk you through the process we used to come up with one of my favorite “under the radar” plays of 2021.
Major Consumer Trend: Urban Exodus
Turns out, we’re ahead of the curve here in Louisville, Kentucky.
What we’re calling, the “Urban Exodus”.
We figured out a long time ago you don’t HAVE to be in the city center in order to conduct business. Especially considering the technology available today.
As consumers were forced inside to live, work, and play over the last year, many realized they needed some room to breathe.
And data suggests many who can move out of the city, are doing so…
The chart above tracks the number of people talking about moving out of a city to a more rural environment.
As you can see, this trend was accelerated by the pandemic in 2020, and has stabilized at levels significantly higher than prior-year highs.
Company: Tractor Supply Company (TSCO)
Tractor Supply is the largest rural lifestyle retailer in the U.S., with smaller, fragmented competition.
And because of the Urban Exodus trend we discussed earlier, more consumers are moving to rural locations and experiencing Tractor Supply for the first time.
So… how does this incoming customer base feel about their experience?
One way we can find out is by comparing Tractor Supply to other large retailers that customers may have more experience with.
To do this, I’m going to break out our brand-new technology, The Outlier Discovery Grid:
This new approach to finding outlier stocks that could benefit big from consumer MegaTrends is really quite simple, but again, very powerful.
The further to the RIGHT a company is on the chart, the more we are seeing Consumer Demand for the company’s products and services increase.
The further UP a company is on the chart, the higher the Consumer Happiness readings are for the company.
So you really want to be in the top right: Rapidly growing demand from happy customers.
We call that the Outlier Zone.
And that is exactly where we see Tractor Supply: up and to the right in the Outlier Zone… ready to benefit big from the huge Urban Exodus MegaTrend.
None of this is news to LikeFolio Members… we alerted them to TSCO back in early March at $161/share.
Since then, even in a tough market environment, shares have surged ahead by over 14%.
And best of all, because of the consumer insights technology we have in place, we will be able to keep our eyes on the Consumer Demand and Happiness levels in real-time moving forward for signs that it’s time for us to move on.
But for now, it looks like our original thesis on the Urban Exodus is still in the early stages, and Tractor Supply continues to create high levels of demand and happy customers.