Dollar General is the largest discount retailer in the United States by number of stores with over 10,000 neighborhood stores in 40 states. The company offers a selection of merchandise, including consumables, seasonal, home products and apparel. The company's merchandise includes national brands from manufacturers, as well as private brand selections with prices at substantial discounts to national brands. It offers its merchandise at everyday low prices through its convenient small-box locations.
In the early June, the company announced its Q1 strong results. Net income increased by 36% to USD 213 million in the 2012 first quarter, compared to net income of USD 157 million in the 2011 first quarter. Diluted EPS increased by 40% to USD 0.63 from USD 0.45. The company raised its forecast for the entire year of 2012.
In this sluggish economy, Dollar General’s business model gives an edge to success. In fact, people are not inclined to spend a lot so they look for low prices. In a store, 24% of the products are at one dollar or less and few prices are above USD 10. Furthermore, the small box format keeps costs low and enables the company to have high average sales per square foot.
The valuation is in line with the industry. Of course, it is not cheap. But EPS revisions are increasing since September 2011. For the three coming years, sales are expected to increase by 9% CAGR and EPS by 33% CAGR. Superformance gives the best rating to Dollar General.
Technically, the security is in a strong bullish trend supported by the breakout of the ascendant channel. In daily and weekly data, moving averages are in an upward trend. The stock is currently testing its USD 52.6 short-term resistance. A crossing of it would be a new bullish signal.
Therefore, investors can buy the stock on a crossing of the resistance in the closing price. The target price will be USD 57.1. To avoid important losses, a "stop-loss" will be fixed on 20-days moving average, below USD 50.
Dollar General Corporation specializes in reduced-price distribution of mass consumption products. Net sales break down by family of products as follows:
- consumption products (81%): hygiene and cleaning products (paper towels, toilet paper, trash bags, etc.), food and beverage products, personal care and beauty products (soaps, shampoos, toothpastes, perfumes, cosmetics, etc.), OTC medications, and pet care products;
- seasonal products (10.6%): decorative items, toys, batteries, greeting cards, paper products, lawn and garden products, office supplies, etc.;
- household items (5.6%): kitchen items, small appliances, light bulbs, picture frames, candles, bathroom products, etc.;
- clothing and accessories (2.8%): clothing for men, women, and children, underwear, shoes, purses, etc.
At the end of January 2024, the group had a network of 19,986 stores located in the United States.
DOLLAR GENERAL CORPORATION 
