Today, I am recommending purchasing shares in Dollar Tree (DLTR), as its shares responded well to the company’s fiscal fourth-quarter earnings report last week.

Investors are becoming enthused about the company’s new format for smaller markets, which combines elements of the traditional Dollar Tree dollar store’s format and the wider price range of the company’s Family Dollar store format.

DLTR earnings have been consistent since the Family Dollar Stores acquisition, and this new format has the potential of giving a further lift to growth. At 17X this year’s earnings per share (EPS) estimate, there is decent value in this stock in the current market environment.

Buy DLTR under $110. My target is $125. I will have more details in tomorrow’s Value Authority monthly issue. 

At the same time, I am recommending selling Genuine Parts Company (GPC). The stock is trading nearly 4% above my $110 target and is fully valued at 20X this year’s EPS estimate. While the company has done a great job with controlling its costs as it reduced its product line, growth may be a little more difficult, especially if more people continue to work from home after the pandemic.

Sell GPC.