Dollar Tree (DLTR) Rallied Following the Divestiture of Its Family Dollar Business

The London Company, an investment management company, released its fourth-quarter 2025 investor letter for its “The London Company Mid Cap Strategy”. A copy of the letter can be downloaded here. In Q4 2025, US equities posted the third consecutive quarter of higher returns, with the Russell 3000 Index rising 2.4%. The market highlighted how investors balanced the optimism on earnings growth and concerns regarding AI returns and cooling macroeconomic factors. In the quarter, the portfolio returned 3.2% (3.0% net) compared to a 0.2% increase in the Russell Midcap Index. Both stock selection and sector exposure contributed to the relative performance of the portfolio in the quarter. In addition, please check the Strategy’s top five holdings to know its best picks in 2025.

In its fourth-quarter 2025 investor letter, London Company Mid Cap Strategy highlighted stocks like Dollar Tree, Inc. (NASDAQ:DLTR). Dollar Tree, Inc. (NASDAQ:DLTR) operates a multi-point chain of discount stores. On February 24, 2026, Dollar Tree, Inc. (NASDAQ:DLTR) stock closed at $131.71 per share. One-month return of Dollar Tree, Inc. (NASDAQ:DLTR) was 10.59%, and its shares gained 77.65% over the past 52 weeks. Dollar Tree, Inc. (NASDAQ:DLTR) has a market capitalization of $26.865 billion.

London Company Mid Cap Strategy stated the following regarding Dollar Tree, Inc. (NASDAQ:DLTR) in its fourth quarter 2025 investor letter:

"Dollar Tree, Inc. (NASDAQ:DLTR) – DLTR was a top performer after completing the divestiture of the Family Dollar business, removing a long-standing drag on growth, margins, and returns. The stock’s re-rating appropriately reflects higher quality fundamentals and a cleaner story for stand-alone DLTR. We see significant optionality for value creation as the company executes its multi-price strategy and launches a long-awaited store renovation program with attractive expected returns."

Dollar Tree, Inc. (NASDAQ:DLTR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 47 hedge fund portfolios held Dollar Tree, Inc. (NASDAQ:DLTR) at the end of the fourth quarter, compared to 49 in the previous quarter. While we acknowledge the potential of Dollar Tree, Inc. (NASDAQ:DLTR) 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.

In another article, we covered Dollar Tree, Inc. (NASDAQ:DLTR) and shared a list of best retail stocks to buy according to analysts. In its Q4 2025 investor letter, Meridian Contrarian Fund expressed optimism that Dollar Tree, Inc.'s (NASDAQ:DLTR) renewed focus could result in significant earnings growth. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.