Presidents Day Sale: 12 Unbeatable Trades at Sale Prices
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Dollar Tree (DLTR)
Discount Retailer Selling at a Discount Price
By Chris Johnson and Jon Lewis
With desperate times calling for penny-pinching, and with more and more consumers stretching their precious dollars, deep-discounters are finding themselves in a retailing sweet spot.
Big Lots (BIG) was one of the better performers for the first half of 2008 as consumers started feeling the pressure of the slumping economy. Now, one of the most crowded areas in shopping center parking lots is in front of deep-discounters such as Family Dollar (FDO) and Dollar Tree (DLTR). We expect the economy will continue pushing shoppers through Dollar Tree's doors throughout 2009.
Dollar Tree took an 18% haircut last week on the heels of some analyst downgrade activity. We’re viewing the quick devaluation of DLTR shares as an opportunity to enter the discount retailer at ... well, a discount.
Those looking to leverage the potential move in Dollar Tree should consider the DLTR August 32.50 Calls (DQOHZ) for around $7.
(Note: We currently have DLTR as an open position in our Winning Edge service.)
