Pressure should lift Dollar Tree

Article Excerpt

DOLLAR TREE INC. $174 is a buy for aggressive investors. The company (Nasdaq symbol DLTR; Consumer sector; Shares outstanding: 225.1 million; Market cap: $39.2 billion; No dividends paid; Takeover Target Rating: Medium; www.dollartree.com) is North America’s largest operator of dollar stores, with 16,077 locations in 48 U.S. states and Canada. Those stores operate under the Dollar Tree, Family Dollar, and Dollar Tree Canada banners. The stock has gained 10% in the past month following a new deal with activist firm Mantle Ridge, which owns 5.7% of the shares. Under the settlement, Dollar Tree added seven new directors to its board, including a former CEO of rival discount retailer Dollar General Corp. Due to rising shipping and other costs, Dollar Tree recently raised the maximum price for merchandise to $1.25 from $1.00. That should help lift its earnings in the fiscal year ending January 31, 2023, by 37% to $7.95 a share. The stock trades at a reasonable 21.9 times that forecast. The company could also increase investor…