Discount Retail Stock Sports "Win-Win" Catalyst, Says Analyst

DLTR is underperforming the broader market, presenting an exciting entry point

Deputy Editor
Jan 29, 2024 at 9:14 AM
facebook X logo linkedin


Shares of Dollar Tree Inc (NASDAQ:DLTR) are 2.8% higher premarket following a bull note from J.P. Morgan Securities. The analyst upgraded the discount retail stock to "overweight" from "neutral" and raised its price target from $122 to $157 -- an 18.3% upside to Friday's close.

The Wall Street brokerage cited higher profitability, calling the company's Family Dollar banner store's optimization a potential "win-win" catalyst. What's more, Dollar Tree's CEO said deflation could present a multi-year merchandising opportunity that will allow for product reinvestment and re-introduction of items discontinued due to inflation pressures.

On the charts, DLTR is underperforming the broader market, down 6.6% this quarter, while the SPDR S&P 500 ETF Trust (SPY) boasts a 2.6% gain in the same timeframe. This presents a unique entry point for investors, as it trades in the range of a late-August post earnings pullback and looks to open above $136 -- a chance to move above this area for the first time in 2024. 

Despite the underperformance, the majority of analysts are still optimistic on Dollar Tree stock, with 11 rating it a "strong buy." However, there's still room for pessimism to unwind, considering eight others recommend a tepid "hold," and one says "sell."  

Options traders looking to speculate on DLTR's short-term trajectory should consider options. The equity's Schaeffer's Volatility Index (SVI) of 26% is higher than just 16% of all other readings from the past year, suggesting near-term option contracts are attractively priced at the moment, from a historical volatility standpoint.

What's more, Dollar Tree stock's Schaeffer's Volatility Scorecard (SVS), which sits at a slightly elevated 77 out of 100, suggesting it exceeded option traders' volatility expectations during the past year. 

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI