TSCO

What do they do?  Retail farm and ranch stores throughout the United States  A vast array of products that allow Tractor Supply to be a “one stop shop”  Product groups are broken down into the following categories: livestock and pet, hardware tools and trucks, seasonal gift and toy products, clothing and footwear, and agriculture

Breakdown of Revenue In order from greatest to least, Livestock, Hardware, Seasonal, Clothing, Agriculture

Selected Financial Data

Growth Strategy and Important Metrics  Investing activities have increased from $74 in 2009 to $166.2 in 2011 (in millions)  Attributed to the addition of 85 new stores in 2011, the construction of a new distribution center in KY, and the purchase of 12 of their previously leased stores in 2011  The company leases 93% of their stores, of their total 1,085 stores in 44 states as of Dec 31, 2011  “We have developed a proven method for selecting store sites and have identified over 1,000 additional markets for new Tractor Supply stores.”

Growth Strategy and Important Metrics Cont.  Strong same store sales growth.  Long term goal to have private label brands account for 25% of sales, boosting margins and bottom line growth.  Realistic stock buy back program  “We believe that Tractor Supply has successfully tweaked merchandise assortment across its stores, which is in line with the prolonged economic downturn. The company has increased the proportion of less discretionary items, such as animal and pet-related products, while reducing shelf space for certain big-ticket merchandise, such as outdoor power equipment.” – Zacks Equity Research

“Intangibles”  An established and trusted brand  Members of the community, not just another store  Operate in a niche market with no direct competitors

Recommendation  Step into the position with half of our intended holding  The company has a high P/E of 26 and could fall given a miss in earnings or a negative short term headline  Purchasing the other half if P/E drops to 21-22