Mantle Ridge LP, a major holder of Dollar Tree (DLTR), recently added 738,862 shares. The buy increased the fund’s position by 7 percent, and came to a total cost of $99,281,000.
This is the first insider buy since September, when a company director bought 1,650 shares, paying just under $174,000. DLTR shares are up about 30 percent since then. Company insiders have been mixed over the past two years, with buyers exceeding sellers.
In total, DLTR insiders own 0.3 percent of shares.
The low-priced retailer is down less than 5 percent over the past year, with shares making up for steep losses earlier in the year.
Inflation has weighed on profitability over the last year. That’s easily seen by DLTR’s 20 percent drop in earnings, even after revenues are up 5 percent.
Dollar Tree’s profit margin stands at 4 percent, about half the margin of a traditional grocery store. Shares now trade at 20 times forward earnings.
Action to take: With inflation moderating, operations could improve over the next 12 months, helping Dollar Tree shares continue to trend higher. Investors could see double-digit returns in shares in the months ahead. At present, DLTR does not pay a dividend.
For traders, the March 2024 $150 calls, last going for about $5.00 could see mid-to-high double-digit returns from a move higher in the coming months.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.