Hedgeye CEO Keith McCullough is adding Dollar Tree (DLTR) to the long side of Investing Ideas. Below is a brief note.
Patience remains a core holding in our #process...
If you wait and watch, eventually your Buy List comes your way. We're seeing Dollar Tree (DLTR) do that today, correcting -4.5% into the close.
Here's a summary excerpt from Retail analyst Brian McGough's Institutional Research on why we like this name from the perspective of the fundamental Pods (REVS and Cash Flows):
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In early March we said DLTR was one of the best names to own in all of retail, and it has sat at the top of our long list since. After all before Covid-19 it had the worse sentiment it had seen since the great recession, and throughout the virus disruptions it has been one of the few open retailers selling essentials that wasn’t trading at peak multiples. Expectations are now heading higher and the stock is re-rating upwards accordingly, so we’re definitely a little more cautious on the trend set-up, especially as we head into Macro Quad3 in 2H20. We’re still very much bullish on the long term optionality here. Dollar Tree has some real earnings growth levers with new stores, and breaking the buck. Family Dollar has gone from borderline irrelevant to perhaps a much brighter future from the comp and customer acquisition momentum under Covid-19. |
Buy on red,
KM