Inflation is taking a big bite out of our wallets.
And it’s only set to get worse.
In fact, according to Fatherly.com, the average U.S. household will spend about $5,200 more this year to have the same standard of living they had a year ago.
Great news, isn’t it? I kid, of course.
“Now with costs of meat, milk, and vegetables ballooning, and rent and home costs going up, too, budgets are going to be very tight, even impossible to manage, for many parents,” they added.
Now, even higher income consumers are cutting back.
A new survey from CNBC found that Americans with incomes of about $100,000 are cutting back on spending, or may soon do so. “More than half of people with household incomes under $50,000 say they have already cut back on multiple expenses due to prices, and for those with income of at least $100,000, the cutback levels are already similar when it comes to dining out, taking vacations, and buying a car,” added CNBC.
So, how can we invest in that news? One way is to invest in discount retailers, like Dollar General (DG), Dollar Tree (DLTR), and Five Below (FIVE), for example.
Look at Dollar General.
Since the end of February, the stock has raced from $185 to $245. The stock is also up on optimistic numbers. For its current fiscal year, DG expects to see net sales growth of about 10%, with 2.5% same store sales growth. DG also believes EPS could grow between 12% and 14%. Dollar General also raised its quarterly dividend to 55 cents, and expects to buy back about $2.75 billion worth of stock.
Or, look at Dollar Tree, which jumped from $130 to about $164. Even Five Below is up slightly from about $145 to $171.
Moving forward, until inflationary issues subside, and until consumers start spending again, discount retailers could see higher highs.