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Dollar General: A discounter at discount prices?
Purpose
Dollar General is a US supermarket/discounter chain headquartered in Goodlettsville, Tennessee. The supermarket chain recently had almost 20,000 stores in the USA and Mexico. With approximately 170,000 employees, the company generates sales of approximately USD 38 billion and EBITDA of approximately USD 3 billion. The company is also a sponsor of NASCAR motorsports and produces a variety of its own products, from cleaning products, drinks and sweets to vitamins and medicines.
Analysis
In 2022, the share price stood at over USD 262 at times and is currently trading below USD 75, i.e. over 70% lower. We are starting to find the share interesting at this level. The trailing and forward P/E is currently just over 11, the price/sales is below 0.45 and the price/book is just 2.22. At Walmart, for example, both P/Es are over 30, the price/sales is over 1 and the price/book is over 7.9. Dollar General is therefore cheaply valued compared to the industry. The company also pays a dividend of around 3% per year. At the current market cap, the question must ...
In 2022, the share price stood at over USD 262 at times and is currently trading below USD 75, i.e. over 70% lower. We are starting to find the share interesting at this level. The trailing and forward P/E is currently just over 11, the price/sales is below 0.45 and the price/book is just 2.22. At Walmart, for example, both P/Es are over 30, the price/sales is over 1 and the price/book is over 7.9. Dollar General is therefore cheaply valued compared to the industry. The company also pays a dividend of around 3% per year. At the current market cap, the question must also be asked whether Dollar General could become a takeover target sooner or later.
The share could be in the final stages of a “c” wave. This could push the share down to USD 68.88 or possibly even USD 58.40. After that, we expect prices of at least USD 130 over the next 3-5 years. The share is also heavily oversold at practically all time levels
Conclusion
Market development: As we believe that the general stock market is currently too overheated and expensive, it may be better to favor more conservative, less expensive dividend stocks such as Dollar General. The share should fall to a maximum of USD 68.88 or USD 58.40.
Long-term forecast: We expect a minimum price target of USD 130 over the next 3-5 years.
Technical analysis: The share is in the final phase of a potential wave “c” and is already massively oversold at practically all time levels.
Dollar General
- VALOR 10715003
- ISIN US2566771059
- Author Oliver Dolezel
- Date 21.11.24
Analysis Performance
Performance since initial analysis
21.11.24
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