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5. Dollar General Corporation (NYSE:DG)
Number of Hedge Fund holders: 53
Dollar General Corporation (NYSE:DG) is the largest discount retailer in the United States. The company operates nearly 18,000 stores in 46 states and plans to open ten stores in Mexico by the end of FY2022. During Q1 2022, the company’s cash flow was recorded at around $168 million and repurchased shares worth $747 million. Dollar General Corporation (NYSE:DG) also paid $125 million in dividends in the same quarter.
Between 2011 and 2021, Dollar General Corporation (NYSE:DG)’s revenue surged from $14.8 billion to $34.2 billion with a compound annual growth rate of 9%. Furthermore, during the same period, the net income displayed a CAGR of 12% from $767 million in 2011 to $2.4 billion in 2021. On top of that, Dollar General Corporation (NYSE:DG)’s stock grew by nearly 360% in the last decade.
In the first quarter of 2022, hedge funds showed a positive sentiment towards Dollar General Corporation (NYSE:DG). Out of the 912 hedge funds tracked by Insider Monkey, 53 had a stake in the company compared to 44 in the previous quarter.
Here is what LRT Capital Management has to say about Dollar General Corporation (NYSE:DG) in its Q3 2021 investor letter:
“Executive Summary
At LRT Capital Management we are continuously searching the market for great investment opportunities. Our favorite finds are companies with moats and growth opportunities that justify a higher price than what the stock is trading for. One of our holdings (approximately 1.5% of our long exposure) is Dollar General (DG), so today, we wanted to tell you a bit about this great company.
Company Overview
Dollar General is a discount retailer with the largest brick-and-mortar presence in the United States by store count. The company’s largest concentration of stores can be found in the southern, southwestern, midwestern, and eastern parts of the United States.10 Dollar General was founded in 1939 by J.L. Turner, who originally named the company “J.L. Turner and Son, Wholesale”. As the name suggests, the company began its life as a wholesaler, but quickly turned to a retailer of general store goods. By the early 1950s, the company had annual sales of $2 million per year,12 which is the equivalent of $22.95 million in 2021 dollars when adjusted for inflation.
The first Dollar General store opened on June 1st, 1955 in Springfield Kentucky. The simple concept was that no item in the store would cost more than one dollar. The company changed its name to Dollar General Corporation in 1968 when Dollar General became publicly traded. At the time of its initial public offering, the business generated more than $40 million in annual sales. The company’s common stock was publicly traded from 1968 until July 2007, when it was taken private by KKR. The company went public again in November 2009, under the ticker DG.
Today, Dollar General is an evolved, and phenomenal business with more room for growth. Annual sales reached a record $33.7 billion in fiscal year 2021 after consecutively growing the top line for many years. The company’s main products are every-day necessities and consumables purchased by lower income consumers on tight budgets…”
