Wells Fargo Raising Estimates On Dollar Tree Stores

Wells Fargo is out with a research report on Dollar Tree Stores, Inc. DLTR and is raising earnings estimates on it. It has a $72-$76 price target on shares. In the notes, Wells Fargo writes, "We are reiterating our positive view on the dollar stores, in light of recent market volatility, ongoing consumer preference for value, and a pull back in energy prices which disproportionately provides relief to dollar stores given their large store footprints and low-end customer. What do we like about the dollar stores? (1) the unique combination of low prices and convenience which provides relative safety from Amazon and Walmart, (2) strong revenue growth in primarily defensive product categories, fueled by comps, new stores, and remodels, (3) among the highest returns on invested capital in retail, (4) frequent interest from activist and private equity investors, and (5) relatively attractive valuations relative to growth. We are also raising estimates for Dollar Tree ahead of Q2 earnings this Thursday (8/18)." Shares of DLTR gained $1.18 yesterday to close at $67.93.