Post #135 by rnam on the Falling Knives board

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Investment Strategies / Falling Knives

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I think Dollar General is a better buy than SBUX, esp. if there is a recession. Its customers' purchases are less discretionary than SBUX's. Plus they may get customers downgrading from more expensive stores. And in rural areas they may not have other options. Their main dollar store competitor, Dollar Tree, has been struggling with integrating Family Dollar stores that it acquired.

DG is trading at fwd PE of 16 compared to 5 year average of 20.5. ROE is almost 40%. They are still opening stores and should be able to continue for several more years. Share price has been cut by a third over the last year due to earnings shortfall blamed on supply chain and inflation issues, but this should ease in a couple of quarters.

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