Are Dollar General Corp. (DG), Dollar Tree, Inc. (DLTR) Buys?

But, going forward, what worries me most about this retailer is its reliance on consumables like tobacco. Even if sales remain strong, at the end of the day, its profitability prospects could be seriously damaged.

Should you buy Dollar General?

Trading at 17 times the past 12 months’ earnings as compared to the industry’s average price-to-earnings ratio of 25, this discount retailer is looking pretty attractive.

Nonetheless, the recent cut in full-year EPS forecast seems to have spooked analysts. A day after the company reported earnings, MKM Partners reiterated its “buy” rating on the stock butreduced its target price from $62 to $59.

Going forward, investors should remain on their guard. If the Fed continues to give consumers a hard time, then Dollar General Corp. (NYSE:DG) could continue to witness volatile results.

Fani Kelesidou has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article Is This Dollar Store a Buy? originally appeared on Fool.com.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.