Retail Sales Were Strong. Casey's Will Benefit. -- Barrons.com

By Teresa Rivas

The latest retail sales show that American consumers are still managing to power through inflation. That's another good sign for Casey's General Stores, a Barron's stock pick. Casey's is up 7% since our last update, beating the State Street SPDR S&P Retail ETF's 1.6% decline. Since our original 2024 recommendation Casey's stock has more than doubled while the XRT ETF is up just 7%.

We still like Casey's stock, which was helped today an analyst endorsement. William Blair's Phillip Blee added the company to his firm's Conviction List, writing that the stock's post-earnings selloff has gone too far.

On Wednesday, the U.S. Census Bureau said retail sales rose 1.2% in August, to $773.9 billion. That's more than the 0.7% economists were expecting. July retail sales were also revised upward, to a 0.5% decrease, slightly better than the original reading that showed a 0.6% decrease.

Certainly gasoline was part of the equation: Those sales rose 3.1% month over month, as people continue to pay more at the pump. But it wasn't the whole story. Online sales grew 2.6%, and discretionary categories were up 1.6%, showing Americans aren't limiting themselves to just the essentials. Spending on sporting goods and other hobbies rose nearly 11% from a year ago, the fifth straight month of double-digit gains.

Overall, core retail sales, which exclude things like cars, gas, and food services, jumped 1.4% last month, the largest gain in nearly two years. That was not only well above the 0.4% average economist estimate, but a major reversal from July's 0.4% decline.

"Strong retail sales mean the consumer is spending despite the inflationary headwinds," writes Jeffrey Roach, chief economist for LPL Financial.

Consumer stocks were responding favorably to the news, with the State Street Consumer Staples Select Sector SPDR ETF and the State Street retail ETF up less than 1% at recent check.

Casey's, too, was moving higher. The company's last quarter was a good one overall and "the recent weakness in the stock seems to be driven more by broader sector rotational pressures," says William Blair's Blee. Investors are avoiding consumer-related stocks amid ongoing inflation "versus any sort of deterioration in company-specific fundamentals." Blee points to the fact that Casey's inside-store sales were healthy, showing it continues to attract customers with its distinct menu of freshly-made foods.

Likewise, with the stock down by more than a third since its all-time high in June, it trades at a very reasonable multiple: At just over 24 times Blee's 2028 earnings per share estimate, he says the valuation is near trough levels, and can expand into the 30-times range thanks to its structural advantages, strong growth profile, and increasing credibility as a consistent operator.

"We also believe investors underappreciate the durability of Casey's earnings profile, supported by structural improvements in fuel-margin economics, additional benefits from continued volatility in oil prices, and multiple avenues for upside from both organic growth initiatives and M&A," Blee writes.

He isn't the only bull. Consensus calls for Casey's earnings per share to grow 11.5% this fiscal year and nearly 10% next year. Two-thirds of the analysts tracked by FactSet have a Buy rating or the equivalent on the shares, with an average price target of $807, implying more than 36% upside.

For these reasons, investors should stay long Casey's.

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September 17, 2026 00:35 ET (04:35 GMT)