A Deal on Now at Family Dollar
Family Dollar Stores (FDO) operates retail discount stores in the United States. It operates a chain of approximately 7,400 general merchandise retail discount stores in 45 states. The company was founded in 1959 and is based in Matthews, North Carolina.
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FDO is trading at a low valuation that is consistent with low valuations that occurred in the stock throughout 2010 and 2011. We believe that Americans love for dollar stores will not end quickly as dollar stores have now become part of every day shopping. We also believe that the company will continue to deliver solid earnings as evidenced by the steady growth in earnings (white line) since 2008.
FDO trades at 15.2X earnings and pays a 1.5% dividend. Their Return on Capital (ROC) is 31% and they have an earnings yield of 8%. The market capitalization is $ 6.5 billion.
LOW VALUATION IN FAMILY DOLLAR AT $ 56.00 (FDO, $56.00)
S&P rates FDO at 4* with a $66 target. The Purple Chips target is $70.00 in 12 to 18 months.
