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99 Cents Only Shares Popped: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of discount retailer 99 Cents Only Stores (NYSE: NDN  ) surged as high as 20% in intraday trading Friday after receiving a $19.09 per share buyout bid from the Schiffer-Gold family, which runs the company, and private-equity firm Leonard Green.

So what: The all-cash offer values 99 Cents Only at $1.36 billion and represents a 14.5% premium to its Thursday closing price. About a third of 99 Cents is controlled by the Schiffer-Gold family, which is making the bid as the low-cost retailer continues to be an attractive shopping alternative for customers amid the downturn. 

Now what: With the stock price currently sitting above the offer price, it seems that Mr. Market feels the offer is on the low side and is expecting a competing offer to emerge. Of course, given the very real possibility that a higher bid doesn't come along, taking some gains off the table seems like a prudent thing to do. After all, with the likes of Dollar General (NYSE: DG  ) and Dollar Tree (Nasdaq: DLTR  ) now trading at a forward P/E discount to 99 Cents Only, you should have plenty of places to roll over that dollar store bet.

Interested in more info on 99 Cents Only? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.

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Brian D. Pacampara, CFA

I take a look at big 10% moves, as well as stock-shaking analyst calls, on a daily basis for The Fool. While I don't believe in active trading, closely monitoring Mr. Market's mood swings can help identify long-term opportunities.

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Related Tickers

12/31/1969 7:00 PM
NDN.DL2 $0.00 Down +0.00 +0.00%
99 Cents Only Stor… CAPS Rating: ****
DG $65.01 Down -0.16 -0.25%
Dollar General CAPS Rating: ***
DLTR $75.08 Up +0.15 +0.20%
Dollar Tree Stores CAPS Rating: ***