There are few places more magical, pristine, organized and wondrous than the grand and immaculate Family Dollar Stores (FDO). Sure, it may be a discount store, but the large variety of items that can be purchased there make it feel a lot like a Wal-Mart.
However, avid shoppers know the distinct difference between the two discount divas. The size of the stores is the main difference. FDO makes it very easy to walk in, grab a copious amount of chocolate, gram crackers and marshmallows and walk out.
NICE BIG DIVIDEND
Now, if we were to look at the charts, you might notice the FDO stock is far from being considered a discount. In fact, FDO stock just paid its shareholders a nice .26 cent dividend per share. Bouncing nicely off a trendline, FDO has had a strong gap up due to earnings, with good volume I might add.
The stock is above prior short term resistance and it’s above the 100- and 200-simple moving average. If FDO closes above $66.05 a nice and respectable target would be $71.30.
WAYS TO TRADE IT
Depending on your strategy, one could buy longer term calls, now that earnings has been announced, or simply decide to own some shares. On a weekly chart the weeks of June 7th and June 28th have nice hammer candles, showing some strong buying pressure from the bottom.
BULLISH CONTINUATION AHEAD
Overall, I think it could take some time for FDO to move higher but I can see many solid arguments for bullish continuation. If you do have a stop placement be quite lenient with its placement. Initially, a few candles below the earnings gap would be an appropriate risk management.
This trade, as a longer term one, should be more exciting than receiving a candy-only shopping spree at any Family Dollar Store. Shop smart folks!
