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Dollar Store Report Card: DG, DLTR, FDO

DLTR still rules supreme among dollar stores, but the sector as a whole is weak

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Dollar Tree (DLTR)

Dollar Tree DLTR stock chart
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After a tepid earnings report in February, Dollar Tree (DLTR) bounced back with a solid first-quarter report last week. Earnings were up more than 11% year-over-year, while revenue was 7.2% better.

Less than a week later, DLTR stock received an upgrade from “neutral” to “buy” at Sterne Agee. The stock, which has been trading between $50 and $55 since the beginning of 2014, was given a $61 target price — a good 15% higher than its then-current price. noted that call buying was very brisk on DLTR, reflecting a bullish outlook.

Dollar Tree shares trade at 19 times earnings and boast a return on equity of nearly 40%. Of the three stocks in the dollar-store sector, DLTR is the only one that has improved (+3.4%) in the past month, and it has handily bested the other two in performance over the past three, six and 12 months.

One small negative: DLTR does not pay a dividend.

Grade: B

Next Page: Family Dollar (FDO)

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