4-Star Stocks Poised to Pop: Dollar Tree
Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, discount variety store operator Dollar Tree (NAS: DLTR) has earned a respected four-star ranking.
With that in mind, let's take a closer look at Dollar Tree's business and see what CAPS investors are saying about the stock right now.
Dollar Tree facts
|Headquarters (Founded)||Chesapeake, Va. (1986)|
|Market Cap||$9.04 billion|
|Industry||General merchandise stores|
|Trailing-12-Month Revenue||$6.41 billion|
|Management||CEO Bob Sasser (since 2004)|
CFO Kevin Wampler (since 2008)
|Return on Equity (Average, Past 3 Years)||27.7%|
|Cash/Debt||$280.2 million / $265.5 million|
|Competitors||Dollar General (NYS: DG) |
Family Dollar Stores (NYS: FDO)
Wal-Mart Stores (NYS: WMT)
Sources: S&P Capital IQ and Motley Fool CAPS.
This past summer, tbonci noted that Dollar Tree "has a very successful business model with a huge chunk of market share." Our CAPS member concludes: "They have consistently high returns, and with the recession, the stigma of shopping at a dollar store is being constantly eroded."
Over the next five years, in fact, Dollar Tree is expected to grow its bottom line at a brisk rate of 19% annually. That's faster than that of discount rivals like Dollar General (17%), Family Dollar (15%), and Wal-Mart (10%).
CAPS All-Star investinggenius elaborates on the bull case:
Dollar Tree's commitment to keeping prices low and stocking only items a dollar or less in its stores resonates with people struggling. ... It seems safe to say that this stock is a fair bet as benefiting from the recession and the frugal chic that's popular now may help it once the recession ends. ... [S]hould win the loyalty of some customers even after this recession lifts and I feel that it is a safe stock during a good economy and a great stock for a down economy.
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At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool owns shares of Wal-Mart. Motley Fool newsletter services have recommended buying shares of and creating a diagonal call position in Wal-Mart. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.