Success One Dollar At a Time: Dollar Tree Stores (NASDAQ:DLTR).
Who Says Money Can’t Go On Tress?
Not Dollar Tree Stores! The 3950 store chain that sells items at $1 at a time has grown into a $6.1 billion market cap growing more like a weed than a tree. It generates enough free cash to buy back $200 million in stock and invest $50 million in new store, renovations and expansions. It trades at 17 times 2010 earnings of $3.07 but only fifteen times 2011 estimates of $3.50. It has been having 6.7% same store sales growth and consistent growth at a low enterprise value divided by revenue of 1.1. It actually has a market cap + debt of 6.1 billion which is 1.0 times 2011 sales. In retail you don’t want to pay more than 1.2 times revenue but for this consistent growth and earnings the stock could go to $57 by end of 2010 and $63 by mid 2011.
Stock Tip Sheet rates Dollar Tree Stores at A Strong buy under $53.
Disclosure: Long Dollar Tree Stores (DLTR).
Disclosure: Long- DLTR