Today it was announced that Dollar General (NYSE:DG) is considering a bid for Family Dollar (NYSE:FDO). This recent indication only adds to the hype that has suddenly fallen upon FDO. On March 31, 2014, we wrote a Quick Take on Family Dollar that had the following conclusion:
"Investors interested in FDO could break their investment into at least two purchases, the first being 60% of the intended amount now and the second purchase of 40% at either of the two indicated support levels at $44.95 or $34.83."
It appears that our indication to consider FDO at the $57.88 range was appropriate as the stock never reverted to any of the suggested downside targets and now trades at $77.47 or +33% higher. This is the second call in a row that FDO has delivered for us. FDO appeared on our watch list of February 17, 2013 which prompted our research and subsequent purchase on March 5, 2013.
Disclosure: The author is long FDO.