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Why Dollar Tree Stock Rose 21% in November

The Motley Fool logo The Motley Fool 12/4/2020 Demitri Kalogeropoulos
a woman holding luggage: Why Dollar Tree Stock Rose 21% in November © Provided by The Motley Fool Why Dollar Tree Stock Rose 21% in November

What happened

Dollar Tree (NASDAQ: DLTR) shareholders beat a surging market in November as their stock rose 21% compared to the 11% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.

The rally put the retailer's shares back ahead of the wider market, up about 18% in 2020 through early December.

a woman standing in front of a building: A woman holding shopping bags while standing on an escalator. © Getty Images A woman holding shopping bags while standing on an escalator.

So what

Investors were treated to some solid operating news from the value retailing chain, which late last month revealed that sales rose 7.5% in the third quarter thanks to growth in both its Family Dollar and Dollar Tree franchises. The company notched improving profitability, too, allowing earnings to jump 29%.

Now what

Due to fluid consumer shopping dynamics during the continuing pandemic, CEO Mike Witynski and his team declined to issue a detailed outlook for key holiday shopping period. Yet Dollar Tree said the fourth quarter was "off to a very good start," with sales gains accelerating as compared to the prior quarter.

That update suggests the chain will notch a record fiscal 2020, likely with significant sales growth and a rising operating margin that give management plenty of resources to direct toward extending its momentum into 2021.

Demitri Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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