Why Dollar Tree Stock Surged More Than 8% Higher Today

Source The Motley Fool

In the eyes of investors, one of the most encouraging actions a company's management team can take is to confidently load up on its own shares.

That's what happened late Wednesday with budget retailer Dollar Tree (NASDAQ: DLTR), and the market showed its gratitude by bidding the company's share price up more than 8%. This was a far more impressive performance than the S&P 500's (SNPINDEX: ^GSPC) 0.1% tilt into the black.

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The CEO made a big move

The manager making the buys was no less than CEO Stewart Glendinning, who disclosed in a regulatory document filed near the end of Wednesday's trading session that he purchased a total of 17,000 shares of Dollar Tree's common stock.

That wasn't only a hefty buy in and of itself -- it added considerably to Glendinning's existing position. According to the filing, he now owns a total of 49,353 shares. At the company's most recent closing price, that holding would be worth over $3.9 million.

Neither Dollar Tree nor Glendinning has officially commented on the CEO's move. It comes at a time when the retail sector in general is rather wobbly, due to fears that a protracted trade war arising from the recently imposed tariffs will affect both the input prices of goods and the U.S. consumer's willingness to buy them.

Counting on an upswing?

Dollar Tree would be in somewhat of an advantageous position in that case. As a discount retailer, it would likely see a boost in business from consumers tilting away from higher-priced retailers to find bargains at discounters. So Glendinning's buy might not only be a sentiment-boosting action -- the CEO could stand to make some good coin if such a dynamic plays out.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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