3. Dollar General Corporation (NYSE:DG)
Number of Hedge Fund Holders: 44
Dollar General Corporation (NYSE:DG) is an American discount retailer with approximately 18,000 variety stores located across the United States. In a recessionary period, many customers shift from branded products to cheap alternatives for household items that Dollar General Corporation (NYSE:DG) supplies, making it a recession-proof security to buy and hold.
On March 17, Dollar General Corporation (NYSE:DG) declared a $0.55 per share quarterly dividend, a 31% increase from its prior dividend of $0.42. The dividend will be distributed on April 19, to shareholders of record on April 5. The stock traded higher in early trading on March 17 despite Q4 earnings falling slightly short of market consensus.
BMO Capital analyst Kelly Bania raised the price target on Dollar General Corporation (NYSE:DG) to $265 from $250 and kept an Outperform rating on the shares on March 18. The company’s Q4 results were “solid” in spite of the “transitory” gross margin pressures, the analyst told investors in a research note. She sees an opportunity for Dollar General Corporation (NYSE:DG) to return to its 10% EPS CAGR from current levels.
Among the hedge funds tracked by Insider Monkey, 44 funds were long Dollar General Corporation (NYSE:DG) in Q4 2021, with collective stakes amounting to $2.20 billion. BlueSpruce Investments, the largest shareholder of the company, disclosed a position worth approximately $637 million at the end of the December 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…”
