Dollar Tree, Inc. (DLTR) & Dollar General Corp. (DG) Continue to Dominate

The dollar stores: great businesses, modest valuations

It’s reasonable to say that none of these dollar stores are screaming values at current prices. Family Dollar Stores, Inc. (NYSE:FDO) pays a dividend, but the company’s 1.6% yield falls short of the 2% yield available on the S&P 500. That being said, Family Dollar Stores, Inc. (NYSE:FDO) trades at about 17 times earnings, about on par with the valuation of the broader market.

Dollar General Corp. (NYSE:DG) and Dollar Tree, Inc. (NASDAQ:DLTR), meanwhile, hold trailing P/E ratios of 19 and 18 times, respectively, which may seem unattractive to die-hard value investors because those valuations are slightly above where the market trades.

However, it’s important to note the pronounced revenue and earnings growth rates pumped out by Dollar Tree, Inc. (NASDAQ:DLTR) and Dollar General Corp. (NYSE:DG), which trounce the comparable growth on the broader market. In addition, all three companies are aggressively buying back their own stock, which will juice earnings growth even more in the months ahead.

Plainly stated, this group of dollar stores has something to offer for nearly all investors. Family Dollar Stores, Inc. (NYSE:FDO) has a long track record of paying and increasing dividends, ideal for dividend growth enthusiasts, while growth investors should be excited by Dollar Tree, Inc. (NASDAQ:DLTR) and Dollar General Corp. (NYSE:DG), which carry modest valuations despite their compelling growth rates.

The article Dollar Stores Continue to Dominate originally appeared on Fool.com.

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