Looks like we have a little profit taking from yesterdays stellar earnings and outlook by DLTR. Still, hoping we have set up for a big reversal-- we are at a 52 week low, yet DLTR growth is impressive, and outlook for the next three months could not be more perfect. I'm not sure why one would want to worry about owning dividend stocks, MLPs, or trusts in these uncertain times-- too risky. Why not just dump your money in DLTR-- bad economy translates into more shoppers going into DLTR. Even, if we have the economy pick up a little-- then shoppers have more money in their pockets to shop at DLTR. Great entry point right now in DLTR-- I review hundreds of stocks-- and on a valuation basis-- DLTR really does stand out at a stong buy. I actually calcuate fair value at $60 a share, the PEG is incredibly low right now on DLTR-- BUY BUY BUY!
Well it's certainly a lot more attractive than it was 4 months ago. But what growth rate are you assuming to get those values?
Same store grew less than 2%, and while they're still opening new stores we really need to worry about saturation. Margins are decent, but you also have to expect pressure there for a chain that can't just sneak in price increases. I'll assume a 7.5% sustainable growth rate, giving earnings next year around $2.85 (which is above estimates).
I agree with a-mar, for the same reasons I outlined a week ago.Same store sales are flat to small growth which is fine. But Dollar Tree will only be able to open so many stores before saturation. They do have plenty of growth aheah, but I see a lot of investors waiting for the stock to come in line to risk for that growth as opposed to this price.
I do believe same store sales can/will grow with the proper promotions and products. But smart investors will be waiting for even more of a pull-back; just like myself.