Weak On High Volume: Dollar Tree (DLTR)
Trade-Ideas LLC identified
(
) as a weak on high relative volume 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 $146.6 million.
- DLTR has traded 1.2 million shares today.
- DLTR is trading at 3.32 times the normal volume for the stock at this time of day.
- DLTR is trading at a new low 3.01% below yesterday's close.
'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.
EXCLUSIVE OFFER: Get the inside scoop on opportunities in DLTR with the Ticky from Trade-Ideas. See the FREE profile for DLTR NOW at Trade-Ideas
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 63. Currently there are 10 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 2.2 million shares per day over the past 30 days. Dollar Tree has a market cap of $18.8 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 6.73 days to cover. Shares are up 0.4% year-to-date as of the close of trading on Tuesday.
EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.
Analysis:
rates Dollar Tree as a
. 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 and solid stock price performance. 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 6.7%. Since the same quarter one year prior, revenues leaped by 116.7%. 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.
- Net operating cash flow has significantly increased by 54.44% to $831.40 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 0.82%.
- DOLLAR TREE INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over 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 ($3.65 versus $1.20).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Multiline Retail industry average, but is greater than that of the S&P 500. The net income increased by 10.9% when compared to the same quarter one year prior, going from $206.50 million to $229.00 million.
- After a year of stock price fluctuations, the net result is that DLTR's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. 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.
- You can view the full Dollar Tree Ratings Report.
EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.
