ATD’s shares may remain volatile over the near term due to uncertainty around the large deal of 7-Eleven.
There is no clear rule of thumb regarding when to sell once a winning name stops performing well, but we have found that if there has been a fundamental change at the company which has caused it to begin underperforming, that this is one of the best reasons to sell a stock. We think investors’ decisions should be solely based on the future prospects of the company relative to its current valuation.
All great stocks have their period of being flat or showing underperformance and that is when investors are tested with the conviction in these names. Volatility is just the price of admission to achieve equity returns in the market, we think investors need some patience here given their track record of acquiring and integrating acquisitions. Overall, we do not believe that anything has fundamentally changed at ATD, and we would be comfortable continuing to hold.