Thursday September 22, 2011
by Mike Cintolo, editor Cabot Top Ten Trader
Hard economic times is good news for Dollar Tree (DLTR) -- a chain of stores that sells most of its merchandise for one dollar or less.
Dollar Tree has more than 4,200 stores across the U.S. and Canada, and are known for sticking to that price point for almost all of their goods.
In Q2, the company booked its tenth consecutive quarter of revenue growth between 12% and
14% and earnings growth of at least 26%.
Steady growth like that is attractive to investors looking for businesses that are actually beneﬁ ting from the economic woes of the past couple of years.
Dollar Tree acquired 86 Dollar Giant stores in British Columbia in November 2010, but most growth is organic.
Lots of people like to shop, and Dollar Tree is a place where a thin wallet can still ﬁll a shopping bag.
The company is also getting attention because of Apollo Management’s bid for the 99 Cent Only Stores chain of stores that have a similar business model.
DLTR built a beautiful ﬂat six-month base at 32–34 from August 2009 through February 2010, and the run since than has lifted the stock to 75.
Despite a correction that dropped DLTR from 70 in early July to below 62 in August, the stock has just registered new all-time highs above 75 and new RP peaks as well.
After a strong run that began in early August, DLTR may need a little time to rest. Look for a dip to the low 70s if you want in.
Learn more about this financial newsletter at Mike Cintolo's Cabot Top Ten Trader.