Deutsche Goes Shopping For Discount Retailer Stocks

Trussell added that he sees upside in the group as being "tempered" in the near term, but the group's "heightened" valuation could remain due to the following:

1. Limited share loss to e-commerce players
2. "Unique" margin profiles and levers
3. An encouraging macro backdrop that could support momentum among the "low-end" customer base

Trussell also stated that the six stocks discussed in the group (seen below) are all trading at over a full-turn premium to their respective historical multiples on an EV/EBITDA basis and 1.9x premiums on their forward P/E.

Related Link: Cramer Shares His Concerns About Retail, And He Has A Lot To Say

Summary Of Analyst Recommendations

1. Wal-Mart Stores, Inc. WMT was maintained with a Hold rating with a price target lowered to $77 from a previous $68.
2. Five Below Inc FIVE was maintained with a Hold rating with a price target raised to $46 from a previous $39.
3. Dollar General Corp. DG was downgraded to Hold from Buy with a price target raised to $99 from a previous $95.
4. Dollar Tree, Inc. DLTR was upgraded to Buy from Hold with a price target raised to $110 from a previous $82.
5. Big Lots, Inc. BIG was maintained with a Hold rating and $49 price target.
6. Fred's, Inc. FRED was maintained with a Hold rating and $15 price target.

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