Discount retailer Ollie's Bargain Outlet has a simple motto: "Good stuff cheap." And Wall Street is on board, as 205% earnings growth and national expansion plans have OLLI stock toying with a fresh buy point.
Alone among its discounting peers, Ollie's made this month's list of new buys by the best mutual funds. It also sports a 93 Composite Rating, meaning it's outpacing 93% of all stocks in terms of key stock-picking factors. OLLI stock also sports a B Accumulation/Distribution Rating and 41 funds with an A+ or A rating from IBD own shares in company.
Within its group, only Miniso — featured on the IBD Breakout Stocks Index on Nov. 1 — rates higher.
Why such interest among top money managers in this quirky, Pennsylvania-based purveyor of closeout merchandise and excess inventory?
Triple-digit earnings growth certainly attracts institutional investors. Extending Ollie's streak of accelerating growth with a beat-and-raise report last quarter, the discount chain posted earnings of 67 cents per share in fiscal Q2 on Aug. 31 — a 205% spike over the prior-year quarter.
Ollie's Bargain Outlet: National Expansion Plans
Another factor driving demand for OLLI stock is the company's aggressive expansion plans. In September, the bargain retailer opened its 500th store, in Iowa, which also marked its 30th state. Ollie's plans to expand nationwide to 1,050 stores, opening 50-55 locations annually until it reaches that goal.
To help accommodate that growth, the company also continues to work on a new distribution center in Princeton, Ill.
Ollie's Bargain Outlook reports fiscal Q3 earnings on Nov. 30. For the full fiscal year, Wall Street sees an EPS increase of 68%.
A look at its weekly stock chart shows the volatility in OLLI stock since 2020. But Ollie's Bargain Outlet has shown some tighter trading since a breakout in July of this year.
The stock has mixed volatility with resilience while forming its current base with an 80.94 buy point. During that setup, Ollie's has generally held support at its 10-week moving average.
On Nov. 1, Ollie's was featured as the IBD Stock Of The Day.
OLLI Shares Test Buy Point
The stock's current base sits above the much longer first-stage pattern. Also note how the relative strength line for OLLI stock remains within striking distance of a 52-week high.
After briefly poking its head about the 80.94 entry at the beginning of the month, Ollie's Bargain Outlet is now testing that buy point again after bouncing off its 50-day line.
Industry peer Miniso stock continues to move right along its 10-week moving average as it forms a new consolidation.
Follow Matthew Galgani on X (formerly Twitter) at @IBD_MGalgani.
