Ollie's Bargain Outlet Holdings, Inc. (OLLI): A Bull Case Theory

We came across a bullish thesis on Ollie’s Bargain Outlet Holdings, Inc.  on TQI capital (Typical quality investor)’s Substack by TQI capital. In this article, we will summarize the bulls’ thesis on OLLI. Ollie’s Bargain Outlet Holdings, Inc. 's share was trading at $133.40 as of September 5^th. OLLI’s trailing and forward P/E were 38.67 and 34.72 respectively according to Yahoo Finance.

Ollie’s delivered a blowout second quarter marked by accelerated growth and flawless execution in a disrupted retail landscape. Management is capitalizing on abundant real estate and a strong pipeline of closeout deals to expand its footprint aggressively, adding 29 stores in Q2 alone and 54 year-to-date, already surpassing prior full-year records. Net sales surged 18% to $680 million, comps rose 5% driven by increased transactions, and gross margin expanded 200 basis points to 39.9%, with adjusted net income up 27% year-over-year to $61 million.

The company raised full-year guidance across sales, comps, and earnings as new stores outperform expectations, particularly in locations acquired from bankrupt competitors. Beyond growth, profitability remains robust, with efficiencies and scale benefits driving margin expansion despite temporary SG&A pressures. A major highlight was the revamped “Ollie’s Days” event, which proved a strategic masterstroke by making promotions exclusive to Ollie’s Army members, adding 100 basis points to comps, boosting sign-ups nearly 60%, and reinforcing the moat around its 16 million-member loyalty program.

This loyalty-driven flywheel of store expansion, customer acquisition, and member conversion is strengthening as weaker rivals exit the market. Supported by a fortress balance sheet with $460 million in cash and no meaningful debt, Ollie’s can seize opportunities in real estate and inventory while repurchasing shares. The market has begun to recognize its success, making the stock less of a bargain, but the long-term runway to 1,000+ stores remains intact. With strategic execution, strong financials, and a widening competitive moat, Ollie’s stands out as a long-duration compounder.

Previously we covered a bullish thesis on Target Corporation (TGT) by LongYield in May 2025, which highlighted the company’s digital sales momentum, cost control initiatives, and omnichannel strength despite weak store traffic and lowered guidance. The company's stock has traded flat, depreciating by 1.18% since our coverage. The thesis still stands as Target’s long-term strategy supports recovery. TQI capital shares a similar view on retail resilience but emphasizes Ollie’s accelerated store growth and loyalty-driven flywheel as key differentiators.

Ollie’s Bargain Outlet Holdings, Inc.  is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 25 hedge fund portfolios held OLLI at the end of the first quarter which was 34 in the previous quarter. While we acknowledge the potential of OLLI as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.