In his second "Executive Decision" segment of his Mad Money program Monday night, Jim Cramer sat down with Gary Philbin, president and CEO of Dollar Tree (DLTR) , the discount retail chain with shares that are up 20.8% over the past month.
(Read Cramer's thoughts on dollar stores, millennials and millennials' spending habits on Real Money.)
Philbin explained that they remain hard at work renovating their Family Dollar locations and expect to complete more than 1,000 renovations by the end of 2019. All of the company's 15,000 stores across the U.S. and Canada are seeing growth.
On the topic of tariffs, Philbin said Dollar Tree continues to mitigate the effects of tariffs by sourcing throughout all of Asia and moving items out of China where they can. The company has always been disciplined with their sourcing, which means they don't need to remove value to stay profitable. The company's private label brands are one way they're able to continue providing the value their customers expect.
What can we expect from the charts? Let's check.
In this daily bar chart of DLTR, below, we can see even though prices rallied strongly in August, prices have not broken out to new highs. The pattern is not complete but we could be seeing a triple top formation. DLTR is above the bottoming 50-day moving average line and the rising 200-day line.
The On-Balance-Volume (OBV) line shows a matching pattern with a high in early May, a second peak in July and one being formed now.
The Moving Average Convergence Divergence (MACD) oscillator is back above the zero line for an outright go long signal.
In this weekly bar chart of DLTR, below, we can see that prices have struggled above the $110 area back in 2017 and three times this year. DLTR is above the rising 40-week moving average line.
The weekly OBV line is in a long-running uptrend and the MACD oscillator is poised to cross to the upside for a buy signal.
In this Point and Figure chart of DLTR, below, we can see a potential upside price target of $121. There is resistance overhead in the $110.87 to $113.10 area.
Bottom line strategy: Chart reading is never perfect. You can have the right location, the right looking pattern and volume, and things can change or morph into something else. Right now I would be cautious.
