Dollar Tree (DLTR) Fell After Disappointing Sales
Madison Investments, an investment advisor, released its “Madison Mid Cap Fund” third-quarter 2024 investor letter. A copy of the letter can be downloaded here. In the third quarter, the fund (Class Y) returned 7.17% compared to the 9.21% increase for the Russell Midcap Index. The Fund returned 12.44%, in the year-to-date nine months, compared to 14.63% for the index. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Madison Mid Cap Fund highlighted stocks like Dollar Tree, Inc. (NASDAQ:DLTR) in the third quarter 2024 investor letter. Dollar Tree, Inc. (NASDAQ:DLTR) is a discount retailer that operates in Dollar Tree and Family Dollar segments. The one-month return of Dollar Tree, Inc. (NASDAQ:DLTR) was -5.53%, and its shares lost 38.70% of their value over the last 52 weeks. On October 17, 2024, Dollar Tree, Inc. (NASDAQ:DLTR) stock closed at $67.86 per share with a market capitalization of $14.572 billion.
Madison Mid Cap Fund stated the following regarding Dollar Tree, Inc. (NASDAQ:DLTR) in its Q3 2024 investor letter:
"The bottom five detractors for the quarter were Dollar Tree, Inc. (NASDAQ:DLTR), MKS Instruments, PACCAR, Copart, and Amphenol. Dollar Tree underperformed following disappointing sales at the core Dollar Tree banner and reduced full year earnings guidance. The company, as well as its closest peers, is facing headwinds from a weak low-end consumer, less ‘trade-down’ benefit from middle-income consumers, and a tough competitive environment. Despite these headwinds, we are encouraged by the long-term prospects of the multi-price initiatives at the Dollar Tree banner, with the latest iteration of updated stores showing a strong up-lift in sales. As management more aggressively rolls out these updates, the impact to the company will be more meaningful, and, we believe, result in much higher earnings power.
The headwinds outlined above impacting Dollar Tree’s business has resulted in the stock trading at depressed levels. Given our confidence in the core strength of the Dollar Tree franchise and its potential long-term earnings power, we added to our holding."
A shopper browsing through a discount retailers merchandise aisle filled with a wide variety of items.
Dollar Tree, Inc. (NASDAQ:DLTR) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 38 hedge fund portfolios held Dollar Tree, Inc. (NASDAQ:DLTR) at the end of the second quarter which was 39 in the previous quarter. In the second quarter, Dollar Tree, Inc.’s (NASDAQ:DLTR) net sales increased 0.7% year-over-year to $7.4 billion. While we acknowledge the potential of Dollar Tree, Inc. (NASDAQ:DLTR) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Dollar Tree, Inc. (NASDAQ:DLTR) and shared the list of oversold growth stocks to invest in. Madison Investments maintained its positive outlook on the long-term potential of Dollar Tree, Inc. (NASDAQ:DLTR) in the second quarter of 2024, even though the stock price declined in the quarter. In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.