Ollie’s Bargain Outlet Holdings, Inc. (OLLI): A Bull Case Theory

We came across a bullish thesis on Ollie’s Bargain Outlet Holdings, Inc. (OLLI) on TQI Capital’s Substack. In this article, we will summarize the bulls’ thesis on OLLI. Ollie’s Bargain Outlet Holdings, Inc. (OLLI)’s share was trading at $120.8 as of 16^th June. OLLI’s trailing and forward P/E were 37.17 and 31.75 respectively according to Yahoo Finance.

Ollie’s Bargain Outlet delivered a standout Q1 FY25, translating its aggressive expansion strategy into record-breaking execution. Management opened 25 new stores in the quarter—the most ever for any single period—and is capitalizing on retail industry disruption, especially the closures of Big Lots and other players. These shuttered stores not only provided attractive real estate (“warm boxes”) with an embedded discount shopper base, but also unlocked closeout inventory, fueling Ollie’s treasure-hunt value proposition.

Comparable store sales rose 2.6%, driven by increased transactions, while net sales grew 13% to $577 million. Adjusted net income beat expectations at $46.1 million, and gross margin held steady at 41.1%, despite a mix shift, affirming management’s 40% target. Although SG&A costs rose due to store openings and medical claims, Ollie’s operating leverage and robust inventory access helped mitigate the impact.

Notably, the loyalty program “Ollie’s Army,” already responsible for 80 %+ of sales, saw strategic enhancements—exclusive shopping events and promotions—cementing customer stickiness in a competitive landscape. Ollie’s is also absorbing displaced traffic from nearby closed Big Lots, with sustained low-to-mid-single-digit sales lifts, reinforcing its ability to capture share. Inventory flow remains a key advantage, bolstered by supplier relationships and exits from smaller chains, while a clean balance sheet—with $415 million in cash and no meaningful long-term debt—ensures continued agility.

Even with looming tariff uncertainty, Ollie’s flexible, deal-driven model insulates it from shocks. While the stock’s valuation now reflects much of this operational strength, the company’s disciplined reinvestment strategy, strong margins, and expanding footprint make it a compelling long-term compounder on its path to achieving its 1,000+ store goal.

Previously, we covered a bullish thesis on Dollar Tree (DLTR) from Tsoh Investment Research, spotlighting its shift toward a multi-price strategy modeled after Dollarama to unlock margin expansion and merchandising flexibility. The thesis on Ollie’s Bargain Outlet (OLLI) by TQI Capital echoes this retail evolution theme, emphasizing scale-driven growth and closeout inventory advantages in a disrupted value retail landscape.

Ollie’s Bargain Outlet Holdings, Inc. (OLLI) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 25 hedge fund portfolios held Ollie’s Bargain Outlet Holdings, Inc. (OLLI) at the end of the first quarter, which was 34 in the previous quarter. While we acknowledge the risk and potential of OLLI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.