How To Unlock 'Huge' Upside At Dollar Tree

10/01/18 01:11PM EDT

Dollar Tree (DLTR) shares have significant upside, particularly if management could get out of its own way, according to Hedgeye Retail analyst Brian McGough who explains in the video above.

Right now, the chain of discount variety stores is sticking with a “if it ain’t broke don’t fix it” mentality. But a few tweaks in the company – especially in its acquisition, Family Dollar – could mean a much bigger upside.

According to McGough and the Hedgeye Retail team, those tweaks include:

  • Breaking away (slightly) from the current $1 price point at Dollar Tree
  • Empowering Family Dollar managers to tailor their stores to localized demands in their largely urban locations

McGough wonders why management won’t take a great opportunity that is staring Dollar Tree right in the face.

“I would want to ask them, point blank, ‘You have an opportunity to go from a two-and-a-half comp to an eight or nine comp – why are you not taking advantage of that?’” McGough says in the clip above.

“Just because you’re very good at something, and you’ve been executing on a great plan, doesn’t mean you have to shun every other plan, especially one that could be a huge value creator.”

Watch the full clip above for more.

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