Investors who have owned stocks in the past year generally have experienced some decent gains. In fact, the SPDR S&P 500 ETF Trust's (NYSE:SPY) total return in the past 12 months is 16.6%. But there is no question some big-name stocks performed better than others along the way.
Dollar Tree's Big Year: One company that has been a great investment in the past year is dollar store giant Dollar Tree, Inc. (NASDAQ:DLTR).
From 2010 to 2019, Dollar Tree underwent a rapid period of expansion, growing its store footprint from around 4,000 locations to more than 16,000 stores in 44 different U.S. states. Part of that significant growth included an $8.5 billion buyout of Family Dollar back in 2015.
Fortunately for Dollar Tree investors, the company's business was relatively insulated from COVID-19 pandemic disruptions. Value-conscious shoppers relied heavily on discount retailers, and many consumers looking to avoid large crowds at supermarkets preferred dollar stores for small purchases.
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At the beginning of 2020, Dollar Tree shares were trading at $94.69. By the beginning of March of that year, the stock was down to around $83 as news of the coronavirus spreading in China prompted concerns about a U.S. pandemic.
Dollar Tree ultimately bottomed at $60.20 during the pandemic-driven March sell-off. Fortunately for Dollar Tree investors, the dip didn't last long. By August, Dollar Tree shares were back above $100, and the stock finished 2020 at around $108.
Dollar Tree's steady march higher stalled throughout most of 2021, but the stock took two major jumps higher late in the year. In late September, Dollar Tree shares soared 16% when the company announced it was raising its buyback program to $2.5 billion, about 10% of Dollar Tree's total market cap at the time.
The company also announced its Dollar Tree Plus locations would begin expanding their inventory by adding additional products priced above $1. Dollar Tree plans to increase its total number of Dollar Tree Plus locations to 5,000 stores by the end of fiscal 2024.
Dollar Tree shares jumped once again by 14% in November when activist investor Mantle Ridge took a $1.8 billion stake in the company. Just days later, Dollar Tree announced it was raising prices from $1 to $1.25.
The late-year headlines pushed Dollar Tree shares to new all-time highs of $149.37 in November 2021.
Dollar Tree In 2022, Beyond: Since November, the Dollar Tree rally has stalled amid broad stock market weakness. Fortunately, Dollar Tree shares have held up relatively well compared to most of the market, and the stock is still trading at $142.82, only slightly off its November highs.
Dollar Tree investors who bought a year ago and held on have generated an impressive return on their investment. In fact, $1,000 in Dollar Tree stock purchased on Feb. 28, 2021, would be worth about $1,433 today.
Looking ahead, analysts are still expecting new highs for Dollar Tree in the next 12 months. The average price target among 22 analysts covering the stock is $155, suggesting an 8.4% upside from current levels.
Photo: Courtesy of Mike Mozart on Flickr
