4 Companies The Unsuccessful Family Dollar Suitor Might Buy

As Dollar Tree DLTR and Dollar General DG battle for Family Dollar FDO, only one will emerge successful.

According to S&P Capital IQ, all hope may not be lost for the unsuccessful suitor. Analyst Richard Peterson says there are four other targets that may make for a good acquisition.

Big Lots

“The largest by market value and revenue would be Big Lots,” Peterson writes. He points out that Big Lots BIG trades under nine times TTM EBITDA and 4.8 percent of the company is owned by activists.

Fred’s

Fred’s FRED owns discount stores and pharmacies in the southeastern United States. “Earlier this year the company reportedly contacted possible suitors,” writes Peterson.

Five Below

An acquisition of Five Below FIVE would allow for some diversification of customer base and product. A concern some investors have is that cost synergies with Five Below may be lower than with a traditional dollar store.

99 Cents Only Stores

99 Cents has been private since Ares Capital acquired the company for $1.58 billion in 2011. The discount retailers has seen strong growth as net income has increased from $0.9 million to $9.6 million since 2011.