Dollar Tree Inc. (NASDAQ: DLTR ) closed around $66 a share yesterday, and the charts show that this stock is ripe for the plucking.
This operator of deep discount variety stores offering merchandise at $1, defied analysts by reporting a very strong quarter on Friday. The Dollar Tree earnings report showed revenues up 14% and earnings at 82 cents vs. analysts' expectations of 76 cents. Over the last four quarters the company has managed to beat analysts' forecasts by 11%. Operating costs have been cut and same-store sales increased by 7.1%. S&P estimates earnings for 2011 to be $3.10 and $3.90 in 2012. Other analysts are revising their future estimates for Dollar Tree stock to even higher levels.
The company has proven its defensive quality in a weak economy. Technically the recent breakout has a target of $70, but the stochastic indicates that it could pull back following the recent breakout. Buy a half position now and go for a full position if DLTR stock falls to $64 or lower.