7 Consumer Goods and Retail Stocks on Jim Cramer’s Radar

5. Dollar General Corporation (NYSE:DG)

Number of Hedge Fund Holders: 45

Talking about Dollar General Corporation (NYSE:DG), Cramer said:

“Now it is true that profitability may be pinching some of these retailers, Walgreens, Dollar General, Dollar Tree, Target, all of which sell these goods and they’ve all seen their stocks just get crushed.”

Dollar General (NYSE:DG), a well-established discount retailer with a significant footprint across the United States, has faced notable challenges in recent years. The company’s stock dropped by 44% in 2024, a performance that mirrored the nearly 45% decline it experienced the previous year. These struggles have largely been said to be due to rising costs and heightened competition, particularly from big-box retailers.

Wall Street analysts have voiced concerns about consumer spending trends in the near term, which are compounded by the retailer’s ongoing competition with larger players in the market. In its second-quarter 2024 results, it reported weaker-than-expected performance, with CEO Todd Vasos attributing the disappointing sales figures to a financially constrained customer base. The trend carried into Q3 2024, where the company posted a 5% increase in sales year-over-year.

The company also faced a sharp decline in earnings, as operating profit dropped more than 25% and earnings per share fell by over 29%. In response to these challenges, Dollar General (NYSE:DG) is implementing its “Back to Basics” plan, which includes initiatives designed to streamline operations and improve profitability. Under this plan, the company is introducing automation in its fulfillment centers, revitalizing older stores, and more to reduce costs, improve customer satisfaction, and enhance margins.