The latest developments with Dollar Tree are playing out like some sort of 1980s comedy routine…
“You know, inflation is so high…”
“How high is it?”
“Inflation is so high that the Dollar Tree is raising their prices to $1.25!”
That’s right, Dollar Tree just announced that they will be raising prices on most goods in their stores from $1.00 to $1.25.
First, it was gas prices, then it was meat prices, and now Dollar Tree is seeing inflation.
This is a bridge too far! How will we go on?
However, Dollar Tree CEO Michael Witynski tried to calm tensions by greeting the news when he said, “Lifting the one-dollar constraint represents a monumental step for our organization and we are enthusiastic about the opportunity to meaningfully improve our shoppers’ experience and unlock value for our stakeholders.”
Ah, I feel better now, don’t you?
The company stated that the “$1.25 price point will enable Dollar Tree to return to its historical gross margin range by mitigating historically-high merchandise cost increases, including freight and distribution costs, as well as higher operating costs, such as wage increases.”
However, don’t let your heart be troubled. There is good news.
Wall Street hob-knobbers were elated by the price increase…so elated, in fact, that they raised the share price by 10% as of this writing, and the share is trading for around $145 per share as of now.
And why should the guys sipping fine bourbon and smoking big cigars be the only ones to profit from Dollar Tree’s growth?
Well, they won’t. We here at Money and Markets won’t allow this to happen. We are on your side, not Wall Street’s!
We recommend buying Dollar Tree. Our super-duper Green Zone Ratings system has performed the complex mathematical equations for you, our loyal reader.
We are “bullish” on the stock, which means we expect Dollar Tree stock to outperform the market by 2x over the coming 12 months.
That is because we view the stock as being low in volatility, which usually means the stock will outperform highly volatile stocks.
So, in the end, the price increase of that $1.00 napkin holder will be more than offset by the increase to your bank account from buying Dollar Tree shares.
Seems like a darn good deal to me!
What about you?