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Money grows on Dollar Trees

May 21, 2011 12:36 PM ETDLTR
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Long Only, Momentum, Portfolio Strategy

Seeking Alpha Analyst Since 2009

Jim Van Meerten writes on financial subjects here and on Barchart Portfolio Blogs and Seeking Alpha. He earned a BS in Accounting and Business Administration from Berry College; a Juris Doctorate from the Woodrow Wilson School of Law; and attended post-baccalaureate and graduate courses in Business Administration, Quantitative Math, and Education at Florida Atlantic University, Georgia State University and University of North Carolina at Charlotte. In the past he has been an accountant, attorney, adjunct professor in Business Law, Accounting and Internal Auditing, financial advisor, supervisory principal, and compliance officer. He also passed the Georgia CPA Exam, the Certified Internal Auditor Exam, and the FINRA Series 7, 24 and 9/10 exams.He is presently also a contributor on MSN Top Stocks Blog, Motley Fool and is a member of the M100 on Marketocracy, an elete honor chosen by the editors of Marketocracy as being in the top 100 portfolio managers of over 100,000 portfoiios they review. He would enjoy hearing your comments at JimVanMeerten@gmail.com.

 I like to screen on Barchart to find growth stocks that are moving in the current market.  With 12 new highs and up by 8.30% in the last month Dollar Tree (DLTRdeserves a look.

Dollar Tree Stores, Inc (DLTR) is an operator of discount variety stores offering merchandise at a fixed price point of $1.00 or less. Its stores successfully operate in major metropolitan areas, mid-sized cities and small towns and perform well in a variety of locations. They offer a wide range of quality everyday general merchandise in many categories, including housewares, seasonal goods, candy and food, toys, health and beauty care, gifts, party goods, stationery, books, personal accessories, and other consumer items.
Right now they have around 4,100 stores but have a goal of 7,000 by the end of the decade.  300 stores will be added this year and 75 of the old ones will either be expanded or relocated.  Most of the items are prepackaged dry goods but management intends to add coolers and freezer to a lot of the stores in the future.
In addition to its aggressive expansion program, since 2003 they have had a stock buy back program that has bought back almost 25% of the outstanding stock and still has a way to go.
Factors to Consider:
Technical Factors:
  • 96% Barchart technical buy signals
  • Trend Spotter buy signals
  • Above its 20, 50 and 100 day moving averages
  • 12 new highs and up 8.30% in the last month
  • Relative Strength Index 69.71% and climbing
  • Trades around 62.53 with a 50 day moving average of 57.04
Fundamental Factors:
  • Beginning to be push by the Wall Street brokerages with their analyst releasing 6 strong buy, 5 buy and 9 hold recommendations
  • Sales are forcasted to grow by 11.40% this year and another 8.40% next year
  • Earnings are projected to increase by 16.40% this year, 13.80% next year and continue to grow annually by 13.66% a year for the next 5 years
  • Goldman Sachs made this a 5 year buy pick on 3/8
General Investor Sentiment:
  • Readers on Motley Fool have discovered this stock and 521 readers have ventured an opinion
  • CAPS members vote 363 to 33 that the stock will beat the market
  • The more experienced All Stars agree 115 to 10 for the same result
Summary:  The Bible says " The poor will always be with you" and I'm saying that there will always be value seeking shoppers and they will continue to shop at Dollar Tree (DLTR).  With an aggressive expansion program, continued stock buy backs and a same store sales increase between 4-8% this stock could give investors around a 16% annual total return over the next 5 years.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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