Family Dollar Stores (NYSE:FDO)

Family Dollar Stores operates 6,655 stores in 44 states. Most products sell for less than $1,140 per unit. The company's strategy is to target low- and middle-income households. Unlike other retailers, FDO benefits from economic recession cycles, as consumers move toward cheaper goods, Family Dollar has little ability to raise prices to offset changes in input costs. In addition, Family Dollar is trying to differentiate itself by focusing on selling food products and opening stores in urban areas.

 FDO's yield is low, with 1.30% (average 1.68%), but offset by a average annual growth of the attractive dividend of 12,65%. In addition, the shareholders' pocket money has been increased for 35 consecutive years. The distribution ratio as for him is very cautious, with only 26.95%.

 The title has shown extraordinary performance since the 90s, which has been paid for by a very high volatility, of 26.95%. The beta on the other hand, with only 0.30, confirms what we said above, namely that FDO is little impacted by economic cycles.

Surprisingly for an American retailer, FDO's CHF performance is inversely correlated with the USD/CHF pair ($risk -0.52). This can be explained by the countercyclical aspect of the title.

FDO has excellent dividend payer qualities, but its yield is too low and its volatility excessive. It may suit an investor who has a strong financial backing and is not looking for immediate income. The stock is also useful as a portfolio hedge against a falling dollar or a downturn in economic conditions.  For now, we see it as an opportunity to watch.