Dollar General Corp. (DG): More Than Just A “Dollar Store”

Wal-Mart Stores, Inc. (NYSE:WMT) is on the opposite end of the spectrum and sells just about everything at about the best prices you’ll find in a physical store. At 15.2 times earnings, Wal-Mart is the cheapest of the three, but this comes at the cost of growth potential. Wal-Mart has essentially saturated its potential market in the U.S. with very little opportunity for expansion, even within its existing stores. Their food sales have been maximized (Wal-Mart is the number one grocery store in America) and their profit margins will remain relatively low as long as they are competing with internet retailers who have less overhead. Wal-Mart Stores, Inc. (NYSE:WMT) does pay a 2.44% dividend yield, however, which is sure to attract some income-seekers.

Conclusions

While Wal-Mart is undoubtedly the safest and most stable stock of the list, sometimes growth has to be a priority. For growth in retail, the “dollar store” segment is growing faster than any other type of physical retailer, and Dollar General is the dollar store that seems to be able to think outside of the box better than its competition.

The article More Than Just A “Dollar Store” originally appeared on Fool.com and is written by Matthew Frankel.

Matthew is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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