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Dollar Tree, Inc. (DLTR): Planting This Tree Would Secure Your Portfolio

In the current environment, where luxury companies such as Coach are finding it difficult to perform decently, investors might be skeptical to put their money on retail stocks. A weak holiday season and budget restrained customers have made it difficult for the companies to perform well. However, things are not that bad and there is still hope.

There are companies who have been doing extremely well, without the prevailing situation affecting them. One of those outperformers is Dollar Tree, Inc. (NASDAQ:DLTR), a discount retailer which is one of the top beneficiaries of tough conditions. It posted solid results which were ahead of expectations, and brought relief to investors. Let’s dig deeper.

An amazing quarter

Driven by huge demand for Dollar Tree, Inc. (NASDAQ:DLTR)’s low priced necessities, revenue grew 15% to $2.25 billion. The company’s varied priced products not only attracted more customer traffic, but also led to larger purchases made by customers on each visit. The retailer has made commendable efforts to control costs, which boosted the bottom line by 22% to $1.01 per share.

One of the key reasons for Dollar Tree, Inc. (NASDAQ:DLTR)’s growth is its geographical expansion, new retail formats, and various channels of distribution. The company added 47 new stores during the quarter, which led to the amazing growth in top line. New formats such as Deal$ stores, which offer varied products at different price points, have also been quite successful.

The discount retailer’s direct distribution channel, the E-commerce business, has been performing remarkably well, and hence the company has been focusing on its expansion. With more and more collection being available, website traffic has been improving. The company plans to further enhance this channel going forward.

Apart from offering a variety of products for $1, the company has increased its frozen and refrigerated products portfolio in many of its stores. This has been an added attraction for the customers.

Remarkable performance

Dollar Tree, Inc. (NASDAQ:DLTR) is one of the best performing players in the industry. Its performance, in terms of returns to its investors, in comparison to peers such as Wal-Mart Stores, Inc. (NYSE:WMT)Dollar General Corp. (NYSE:DG), and Family Dollar Stores, Inc. (NYSE:FDO) can be assessed in the chart below:

DLTR data by YCharts

Clearly, Dollar Tree, Inc. (NASDAQ:DLTR) tops the list with a whopping 172% increase in its stock price over the last 5 years. The company’s continuous growth and effective cost management techniques have enabled it to shine brightly.

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