Dollar Tree opened for trading this morning below Jim Wood's stop loss point as outlined in his article below; as such, he no longer recommends this position.)

I want you to add one new buy to your portfolio — Dollar Tree Inc. (DLTR), which operates discount retail stores in the United States and Canada, notes Jim Woods, editor of Bullseye Stock Trader. 

The eponymous chain includes 8,647 shops under its namesake banner and 8,016 Family Dollar units (as of the end of fiscal 2021) featuring branded and private-label goods, generally at a $1.25 price.

Around 45% of Dollar Tree stores’ fiscal 2021 sales came from consumables (including food, health and beauty, and household paper and cleaning products), nearly 50% from variety items (including toys and housewares) and just over 5% from seasonal goods. 

Family Dollar features branded and private-label goods at prices generally ranging from $1 to $10, with over 76% of fiscal 2021 sales from consumables, 9% from seasonal/electronic items (including prepaid phones and toys), 8% from home products and 6% from apparel and accessories.

Given the current inflation data, it’s safe to assume that many consumers are trying to stretch their dollars and make them go as far as possible. Well, DLTR helps them do just that, and the numbers do not lie.

Over the past three years, the company has seen earnings per share grow 9% annually. And while its last quarter showed a loss, analysts (including myself) are anticipating a strong quarter when the company reports earnings on May 26th. 

(Click on image to enlarge)

As for share price performance, DLTR shares are up 41.9% over the past 52 weeks and up some 13.9% year to date. The annual performance puts the stock in the top 3% of all public companies on a relative price strength basis. 

Technically speaking, DLTR hasn’t been immune to the latest bear market milieu; however, shares now are bouncing off their 50-day moving average (blue line) on their way back to what I think will be well beyond their 52-week closing high of $174.08. Buy Dollar Tree Inc. at market, with a protective stop set at $141.40.