Accessibly priced retailers such as Family Dollar, 99 Cent Stores and Dollar General have become quite the topic of conversation lately on Wall Street.
As you may know,published reports suggest Leon Black's Apollo Group may be in talks to acquire 99 Cent Stores. And on Squawk Box, billionaire investor Bill Ackman called Family Dollar 'recession resilient.'
And that got trader Patty Edwards to thinking.
Maybe there’s someone else out there who could stand to benefit from acquiring one of these retailers. And perhaps it’s someone hiding in plain sight. Someone like Walmart .
Here’s her thesis:
A major challenge facing Walmart has surfaced in the shape of shopping trips that involve long drives for many of their customers. And the demographic that shops Walmart tends to be very sensitive to prices at the pump, which have been on the rise.
However, if Walmart could offer the same experience without the long drive – they could regain their foothold.”I’ve often thought Walmart should open smaller stores in convenient locations,” Edwards says.
And that’s where the idea of acquisition comes in. But not just any acquisition – Walmart would need a big footprint so making a play for say, 99 Cent stores,which has about 300 locations, wouldn’t cut it for Walmart.
"But if they were to acquire Family Dollar, they would have presence in something like 6300 stores,” says Edwards.
Back to comments from Ackman. “Family Dollar is a retailer that offers goods that are priced very similar to Walmart, but it’s a more convenient experience.”
And Walmart can afford it. “The valuation is not out of reach,” Edwards adds.
All told, “It makes sense to me,” she says.
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Trader disclosure: On Sep 16, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders;
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