No. of Recommendations: 4
Andrew Bary of Barron's wrote his thoughts on DG Jan 31.
https://www.barrons.com/articles/buy-dollar-genera...For those pay-walled...covers basics but not much beyond what anyone can see:
"“Very little has to go right for sentiment to improve,” says John Rogers, a senior research analyst at Pzena Investment Management. “It’s a good business in a clearly defined niche.”
Dollar General’s turnaround starts from an enviable position. The company has an entrenched position as the general grocer to rural America. With more than 20,000 stores—including 1,800 in Texas alone and about 1,000 in seven other states, including Florida—it has the largest store footprint of any retailer. About 80% serve communities of fewer than 20,000 people."
A while back I jumped in with confidence, however too early in the falling-knife decline. My gut instinct was 'something larger going on here' as the DG story clearly changed fast. A rougher stretch was ahead than I first concluded. Bailed within 6 weeks with only mild injury. Glad I did.
I still like the company for its simplicity, the geographic moat they have built and competitive pricing power. I'm revisiting...
If theft can be controlled, stores mildly modernized/efficient and their preferred customer accessibility/availability over online & big-box remains with 'reasonable' comparative pricing what's not to like? Kinda proven model, assuming location improvements aren't stupid expensive.
Best news its meaningfully cheaper than mid '23 and pays a nice divvy for those that like that.
Despite the rough patch...it's still an earner. Bottom line for me.
Would appreciate arguments.
Cheers,
m
