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One market-leading stock that insiders are stepping up and doing some buying in is
Dollar Tree(DLTR - Get Report), which operates discount variety stores in the U.S. and Canada. Insiders are paying up here to own stock, since this name has returned over 40% so far in 2011.
This company has a market cap of $9.82 billion and an enterprise value of $9.5 billion. The stock trades at a reasonable valuation, since its trailing price-to-earnings is 22.3 and its forward price-to-earnings is 17.4. Dollar Tree's estimated growth rate for this year is 21.6%, and for this year it's pegged at 16.8%. This is a cash-rich company; the total cash position on its balance sheet is $545.40 million, and its total debt is $265.50 million. After you back out the debt, Dollar Tree has $279.90 million of cash on the books.
A director just
bought 5,000 shares, or $399,211 worth of stock, at $79.84 per share. This same director also bought 5,000 shares, or $325,000 worth of stock, at $63.14 per share back in June.
From a technical standpoint, this stock is currently trading well above both its 50-day and 200-day moving averages, which is bullish. The stock has also just started to break out above some past overhead resistance at $79.35 a share. The only problem with this recent breakout is that it's coming on light volume. That said, the stock is now trading near brand new all-time highs.
If you like this stock, I would probably hold off on getting long since the breakout volume is light and the relative strength index is near 70, which indicates an overbought condition. I would look to get long on the next meaningful pullback that takes the stock closer to its 50-day moving average of $73.23. Keep in mind that if volume does start to come in and the stock is above $81, then it might just get momentum and trend up despite the overbought condition.
Dollar Tree, one of TheStreet Ratings'
top-rated multiline retail stocks, is also one of the
top holdings at Steve Mandel's Lone Pine Capital.