It’s common knowledge on Wall Street that once a piece of information hits the mainstream financial media, it’s probably too late for retail investors to consider taking action on the news. This seems to be the case in stocks today as well. Dollar Tree Inc. NASDAQ: DLTRespecially since some signs of potential institutional accumulation have been identified.
Dollar Tree today
(As of 12/6/2024 6:03 PM ET)
- 52 week range
- $60.49
▼
$151.21
- Target price
- $85.58
Moreover, Dollar Tree’s business has several tailwinds working in its favor today, with restructuring within the business in the face of new economic pressures and broader macroeconomic trends working in favor of the company’s value proposition. To hedge against inflation concerns arising from potential new trade tariffs, some investors may have poured money into Dollar Tree stock before the wave hits, since most know that if it makes the news, it will be too late.
Other market participants, such as Wall Street analysts, recognize the upside potential in Dollar Tree stock today. This is despite the fact that other representatives of the retail sector, such as Target company New York Stock Exchange: TGTshowing bearish price action lately following the release of somewhat disappointing quarterly results. The willingness to buck the trend makes it more important for investors to consider taking a second look at today’s ratings and price targets for Dollar Tree stock.
Signs of Accumulation: Why Dollar Tree Stocks Are Worth Watching Today
When looking at volume data for Dollar Tree stock, it is apparent to investors that most of the volume over the last 12 months has been around the $67 level. Given the amount of time the stock has spent near this level, it would be safe to assume that this behavior could be the result of potential accumulation.
But this is different from the type of accumulation that markets are accustomed to, not this. This is one of those slow “iceberg” accumulations where investors may catch a glimpse of volume during one day, but miss all the other large blocks of buy orders that appeared before or after it. Luckily for investors today, some buyers are getting in on the action.
One of them is State Street, which decided to increase its stake in Dollar Tree shares by as much as 6.8% as of November 2024, amassing a position of $662.9 million today, or 4.3% ownership in the company. Another big buyer was EdgePoint Investment Group, which increased its Dollar Tree position by 0.5% to bring it $487.9 million.
With the stock now trading a dismal 48% from its 52-week high, some investors might say it’s cheap for a reason, and while that would often be true, that’s not the case with Dollar Tree stock today. There are many tailwinds that justify potentially purchasing the name, as these institutions have done recently, here are a few.
First, everyone thought the business model was obsolete due to high inflation rates in the United States, a threat that could significantly reduce the company’s profits. However, management identified the true source of the earnings decline and attributed it to Family Dollar, an underperforming Dollar Tree unit that is being considered for sale.
If and when management decides to spin off this division, profitability is expected to improve immediately, as does earnings per share (EPS). What’s more, Dollar Tree is now acquiring bankrupt 90 Cent stores with attractive lease discounts. These assets will increase Dollar Tree’s book value when they are marked to market.
The company’s latest investor presentation shows that foot traffic and revenue per square foot are growing, meaning that despite bearish forecasts, customers are still finding enough value to justify more trips to Dollar Tree stores.
Wall Street Backs Dollar Tree’s Recent Buy: Here’s How
Dollar Tree Stock Forecast Today
$85.58
Growth potential 19.07%Hold
Based on ratings from 21 analysts
| High forecast | US$140.00 |
|---|---|
| Average forecast | $85.58 |
| Low forecast | $70.00 |
Dollar Tree Stock Forecast Details
Sentiment for Dollar Tree stock has improved recently, even in the middle of what could be described as a terrible year in terms of the company’s price action. Wall Street analysts’ consensus price target of $87.5 suggests 20% upside from today’s price.
There’s also Evercore’s latest ranking, valuing Dollar Tree shares at $92 per share. The stock would need to rise as much as 26% from where it is trading today to prove these emissions correct and justify recent institutional buying.
Supporting these forecasts, analysts forecast Dollar Tree’s earnings per share to be $1.19 over the next 12 months, which would represent a huge jump of 78% from today’s $0.67. Since a stock’s valuation largely depends on earnings per share and its growth rate, investors see the double-digit rally could be just the beginning.
What’s more, the surprise turnaround for Family Dollar’s spinoff could be a critical factor paving the way for higher prices in the coming quarters, something investors should pay close attention to as the company prepares to report its fiscal quarter soon.
Before you consider Dollar Tree, you might want to hear this.
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