Name of opportunity: 👀
Dollar Tree, Inc
Up and down - and up again?: 🎢
Dollar Tree has dropped in value 56.17% over the past 6 months, with the most significant drop taking place yesterday. The stock fell by 20% after the company released a much lower outlook than analysts and investors had been expecting. The company now expects to make $30.6 billion to $30.9 billion in net sales, rather than $31 billion to $32 billion. But because the subsequent fall in the value of the stock has been so dramatic, this could be a good opportunity to invest at a much lower cost, in case the shares go up in value again, as they are predicted to. Part of the reason for a potential recovery could be Dollar Tree’s shift in focus to target higher income customers.
It’s part of a wider pattern that also saw similar budget store chain Dollar General’s stock fall recently. While dollar stores typically maintain strong sales even when the general public has less disposable income, households that are feeling the strain more than ever have been forced to cut back on spending - so discount retailers are affected by fewer sales.
How hot is this investment opportunity? 🔥🔥🔥
While Dollar Tree’s earnings outlook is much lower than had been predicted, the price of the company’s stock has been driven down to a point where it is cheaper than it has been since 2014. But analysts predict the price of Dollar Tree, Inc. will increase from $65.63 to $140.57 in the next 12 months. If you invested $1000, you might profit $1208.51, which would be a really significant profit.
So despite the situation not looking great for the discount store, it’s actually recommended as a ‘Buy’ overall. The company remains in good financial health. It’s taking some dramatic measures to cut costs and get back on track, including closing approximately 1000 stores around the country. Dollar Tree is also considering selling or spinning off Family Dollar, the chain it bought a decade ago.
Dollar Tree’s earnings revealed that the chain had attracted 2.8 million new shoppers this quarter compared to the year before. CCO Mike Credo said in the earnings call that a large proportion of these new shoppers might be higher income households than their traditional core audience of lower income households.
Household goods: 💲
Dollar Tree, Inc. is an operator of discount variety stores. Its business segments include Dollar Tree and Family Dollar. Dollar Tree segment is the operator of discount variety stores offering merchandise predominantly at the fixed price. A Fortune 500 company, Dollar Tree operates 15,115 stores around the US and Canada.
Which neme?: 🔍
‘This Week’s Earnings’, ‘Stocks on the Move’, ‘Biggest Losers Today’
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