Should I Buy Dollar General (DG)? Finance YouTuber Analysis

The analyst views Dollar General as a better buy than Dollar Tree ahead of earnings, citing DG's higher percentage of sales from food and consumables (less impacted by tariffs) and its expected positive sales and earnings growth this year. DG also trades at a lower price-to-sales and similar P/E ratio compared to Dollar Tree.

“But among these two, it's hard not to see Dollar General as the better buy here ahead of those earnings this week.”

Dollar General is recommended as a rebound play after a significant decline. The company has undertaken a comprehensive review, closing underperforming stores and growing in profitable areas. Despite sluggish sales growth, cost-cutting and an increase in earnings are expected to accelerate. The stock is cheap at 0.46 times sales, with a potential return to 0.6 times multiple suggesting a $117 share price.

“Dollar General rebound is more than just a bounce off those oversold conditions. That 23% rebound follows a comprehensive review of the store's portfolio and a plan to close 111 underperforming stores while also growing the store count in those profitable areas.”

The analyst is preparing a video highlighting Dollar General as a buy, noting its recent rebound despite a two-year plunge. The company is undergoing a comprehensive review of its store portfolio, closing underperforming locations while expanding in profitable areas, which has led to improved revenue and same-store sales.

“I'm preparing a video highlighting Dollar General, ticker DG, for next Wednesday. The shares plunged over the last 2 years, but started to rebound, up 27% into this month before the tariff selloff.”

The analyst believes Dollar General is primed for a rebound, suggesting it could be a good investment for a turnaround. This is based on the general outlook for consumer staples.

“Stocks in the consumer staples like Dollar General ticker DG and Walgreens boots Alliance WBA are primed for a rebound could be good Investments on that turnaround”

Despite being one of the worst S&P 500 performers in 2023 due to plunging profitability from inflation, Dollar General is seen as a stable company with strong market share. Its valuation has hit a bottom, trading at a significant discount to historical averages, and slowing inflation should allow for price increases and improved profitability, signaling a turnaround.

“The valuation has hit a bottom here and the stock should do well on that turnaround”

The YouTuber advises against Dollar General, despite its general strength in a recessionary environment, because it is currently trading at a 29% premium to its five-year price-to-sales ratio, making it expensive.

“The dollar stores are even more expensive at... 29% premium for Dollar General.”

The analyst advises avoiding Dollar General, citing similar issues to Dollar Tree, including falling margins, declining earnings, and a management team that seems to be overstating current economic challenges. He believes that if the company is struggling in the current environment, a potential recession could lead to even worse performance, making it a risky investment despite its seemingly low valuation.

“these are a couple of stocks I'm absolutely avoiding yes they're starting to look like values but keep in mind that those earnings are in Decline Revenue could potentially decline over the next year and that is not where you want to be be in a retailer cuz you don't know where the bottom is”