Trade-Ideas LLC identified

Dollar Tree

(

DLTR

) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Dollar Tree 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 $383.5 million.
  • DLTR has a PE ratio of 7.
  • DLTR is currently in the upper 30% of its 1-year range.
  • DLTR is in the upper 25% of its 20-day range.
  • DLTR is in the upper 35% of its 5-day range.
  • DLTR is currently trading above yesterday's high.
  • DLTR has experienced a gap between today's open and yesterday's close of 0.5%.

'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.

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More details on DLTR:

Dollar Tree, Inc. operates discount retail stores in the United States and Canada. The company operates in two segments, Dollar Tree and Family Dollar. The Dollar Tree segment offers merchandise at the fixed price of $1.00. DLTR has a PE ratio of 7. Currently there are 11 analysts that rate Dollar Tree a buy, no analysts rate it a sell, and 9 rate it a hold.

The average volume for Dollar Tree has been 2.5 million shares per day over the past 30 days. Dollar Tree has a market cap of $20.9 billion and is part of the services sector and retail industry. The stock has a beta of 0.49 and a short float of 5.8% with 3.14 days to cover. Shares are up 15.2% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Dollar Tree as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations, increase in net income, solid stock price performance and growth in earnings per share. We feel its 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:

  • DLTR's very impressive revenue growth greatly exceeded the industry average of 5.9%. Since the same quarter one year prior, revenues leaped by 133.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Multiline Retail industry. The net income increased by 234.8% when compared to the same quarter one year prior, rising from $69.50 million to $232.70 million.
  • Net operating cash flow has significantly increased by 139.59% to $311.00 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 -60.93%.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • DOLLAR TREE INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, DOLLAR TREE INC reported lower earnings of $1.20 versus $2.90 in the prior year. This year, the market expects an improvement in earnings ($3.70 versus $1.20).

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