DG - Dollar General: Benefitting From Consumer Shift To Budget-Friendly Alternatives

2024-05-31 11:51:23 ET

Summary

• Dollar General provides cheaper household essentials at a fraction of the cost. They have grown same store sales through increased demand for budget-friendly alternatives.
• Although the starting dividend yield is low at 1.7%, the dividend has increased at a double-digit CAGR.
• Data shows us that customers are starting to prefer store-branded alternatives in an effort to save money. DG has benefitted from this shift.
• Valuation indicates upside potential but there is a risk of more sideways price movement as interest rates and inflation levels remain elevated.

Overview

The Dollar General Corporation (DG) is where you can get all of your household essentials at a fraction of the cost. You can get everything ranging from personal care products, snacks, and even perishables such as eggs and milk. This also means that you sometimes get the same goods at a fraction of the quality as well, but that's a trade-off that many people are willing to make during tough economic times. Tough economic times is precise how many Americans would describe the current financial situation here in the US as we experience slow wage growth, increases in the general cost of living, higher inflation than usual, and higher interest rates....

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