Like countless others before it, this stock has been trading in a long, narrow range for a number of years. This happens occasionally when Wall Street doesn't understand the business model or something like that. Sometimes there's a maturation that needs to take place before a stock is really noticed.
This happened with AutoZone Inc. (NYSE: AZO) back in the 1990s. It's a classic example of a cash-rich, high-cash-generating stock that traded sideways for a number of years before breaking through to the upside.
Dollar Tree Inc. (Nasdaq: DLTR) is another one of those stocks. Back in the 1990s and early 2000s, people didn't quite understand what a dollar store was. They didn't have a big following on Wall Street, and Dollar Tree also moved sideways for years before finally breaking through.
And that's the case for my holiday 2020 stock. It's so cheap relative to the profits the company earns, it's going to move up to its trendline and finally break through. I see this as a high-probability breakout trade. |
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