Subject: Re: Q3 Earnings tomorrow
Jim's target when you bought in 9/2023 was $220
The price-to-sales ratio, or sales relative to share price, is approximately 0.65 - which is about what it was in September 2023... and I believe sales per share continues to grow.


Yeah, that was a bad call : )
It went up to about $167 in the six months after my bullish call around $116, then tanked by 100 bucks a share to more like $67. Oops.

Like many holders I've done nicely lately, especially today, after a long down stretch. Great in fact if you don't look at a chart longer than a year--they have outperformed the average US large cap by a wonderful amount since their relative-to-market bottom in mid January. About 70% advantage. I also added to the position at low prices, so it looks reasonable for me at the moment.

But I'm not selling yet.

The market price results with dollar stores are VERY much more volatile than their earnings, which in turn are more volatile than the true value. Their earnings tend to be weak in the early part of a recession cycle as their poorer customers run out of spare money, which we have just lived through. They then tend to pick up again (both business and price) later in the bear cycle as middle class folks start shopping there out of necessity. Today seems, on the surface of things, to be consistent with the transition between the two states.

Of course, it's not bullish to see what fraction of revenues come from SNAP, which is being cut. This time around may be a bit harsher. And they've cut labour costs to the bone and well beyond, so cyclically adjusted net margins may not be what they once were.

An blindly optimistic view? Historically they traded reliably at or over 1 times trailing sales per share, which might make a non-crazy new target. That's what, about $190 these days? Be of good cheer! And Zeus bless us, every one.

Jim