It’s a tale as old as time – the rise and fall and rise again. Such is the story of Ollie’s Bargain Outlet (NASDAQ: OLLI), a once high-flying stock that stumbled in the wake of the pandemic but has since clawed its way back from the brink. As the stock sits 30% below its 2020 high, many investors have turned a blind eye to this under-the-radar gem, missing out on the potential for a lucrative rebound.
A Phoenix Rising: Ollie’s Big Comeback
In the world of retail, where slim profit margins are the norm, Ollie’s stands out with its exceptional performance. The company’s ability to source excess and closeout merchandise at rock-bottom prices has translated into enviable profit margins, with gross margins around 40% and operating margins hovering near 10% over the last decade.
While 2021 and 2022 presented some challenges, causing a dip in profit margins due to rising expenses, 2023 marked a triumphant return for Ollie’s. With record net sales of $2.1 billion, a rebound in gross profit margins to nearly 40%, and a staggering 74% surge in operating income, the company has definitively put its slump behind.
Unleashing the Potential: Can Ollie’s Beat the Market Again?
Ollie’s ambitious growth plans signal a bright future ahead. With a target of 1,300 locations, up from the current 512 stores, the company is tapping into consumer demand and expanding its footprint at a rapid pace. Coupled with consistent same-store sales growth, Ollie’s is primed for substantial revenue growth in the coming years.
Trading at a modest 19 times its expected operating income for fiscal 2024 and boasting a strong financial position with minimal debt and ample cash reserves, Ollie’s presents an attractive investment opportunity. The company’s commitment to shareholder value through stock buybacks further enhances its appeal as a long-term investment.
Investors who overlook the revival of Ollie’s in 2023 are missing a golden opportunity. With sales on the rise, strategic expansion plans, healthy profit margins, and an undervalued stock, all signs point to Ollie’s Bargain Outlet being a compelling buy in today’s market.
Should you invest $1,000 in Ollie’s Bargain Outlet right now?
Before diving in, it’s worth noting that while Ollie’s didn’t make the Motley Fool Stock Advisor‘s list of top stocks, the company’s resurgence tells a different story. The stock market is a wild ride, but those who see the potential for growth and resurgence may find themselves sitting on a goldmine.
The rise, fall, and rise again of Ollie’s Bargain Outlet is a testament to the stock market’s ebbs and flows. With a renewed sense of vigor, this hidden gem is poised to shine brightly in the world of retail investments.
