Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.
Trade-Ideas LLC identified
) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Dollar Tree Stores as such a stock due to the following factors:
- DLTR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $121.6 million.
- DLTR has traded 564,251 shares today.
- DLTR traded in a range 324.2% of the normal price range with a price range of $2.30.
- DLTR traded above its daily resistance level (quality: 39 days, meaning that the stock is crossing a resistance level set by the last 39 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).
Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.
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More details on DLTR:
Dollar Tree, Inc. operates discount variety stores in the United States and Canada. Its stores offer merchandise at the fixed price of $1.00. DLTR has a PE ratio of 19.1. Currently there are 11 analysts that rate Dollar Tree Stores a buy, no analysts rate it a sell, and 5 rate it a hold.
The average volume for Dollar Tree Stores has been 2.7 million shares per day over the past 30 days. Dollar Tree Stores has a market cap of $10.8 billion and is part of the services sector and retail industry. The stock has a beta of 0.19 and a short float of 2.1% with 1.99 days to cover. Shares are down 7.2% year-to-date as of the close of trading on Monday.
rates Dollar Tree Stores as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, expanding profit margins, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 2.4%. Since the same quarter one year prior, revenues slightly increased by 9.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Multiline Retail industry and the overall market, DOLLAR TREE INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- 37.59% is the gross profit margin for DOLLAR TREE INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 6.65% is above that of the industry average.
- Net operating cash flow has significantly increased by 97.61% to $66.40 million when compared to the same quarter last year. In addition, DOLLAR TREE INC has also vastly surpassed the industry average cash flow growth rate of -20.09%.
- Compared to its closing price of one year ago, DLTR's share price has jumped by 27.87%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- You can view the full Dollar Tree Stores Ratings Report.