Discount retailer Dollar Tree, Inc. (NASDAQ: DLTR, Stock Forum) has been a virtual magnet for upbeat analyst attention lately. Just last week, the stock scored price-target boosts from no fewer than four brokerage firms, and on Tuesday earned both a price-target increase and an upgrade to “neutral” from “underweight” from analysts at JPMorgan.
In addition, the brokerage firm lifted its same-store sales and earnings-per-share estimates through 2011, predicting continued top-line momentum for the company. Furthermore, JPMorgan conceded that its prior downgrade of DLTR was “too early,” as its concerns about procurement costs “proved premature.”
However, even before the recent onslaught of analyst love, DLTR was adored by the brokerage community. According to Zacks, the stock already boasts 12 "buy" or better ratings, compared to seven lukewarm "holds" and only one "sell" recommendation.
Elsewhere, though, not everyone on the Street is enamored of the equity. Short interest on the security increased by 6.3% during the past month, and now accounts for 5.4 million DLTR shares, or 4.4% of the stock's total float. In fact, at the equity's average pace of trading, it would take almost a week for all of these pessimistic positions to be repurchased.
Technically speaking, DLTR has been impressive in 2010, advancing more than 56% atop its 10-week and 20-week moving averages. In fact, the stock has outperformed the broader S&P 500 Index (SPX) by 7% during the past 60 sessions, and on Tuesday rallied as high as $51.35 – a record peak.
Should the shares continue to assail new heights, the lingering skepticism among short sellers could actually work to the stock's advantage. An extended rally could spook some of the bears into abandoning their losing positions, which could translate into a short-squeeze boost for DLTR.
Disclosure: Andrea Kramer has no financial interest in any of the equities or products mentioned in this column.