We recently published a list of 7 Consumer Goods and Retail Stocks on Jim Cramer’s Radar. In this article, we are going to take a look at where Dollar General Corporation (NYSE:DG) stands against consumer goods and retail stocks on Jim Cramer’s radar.
Jim Cramer, host of Mad Money, recently took a close look at market trends and explained why many stocks are continuing to struggle, specifically in sectors like consumer goods. Cramer pointed out that the ongoing bear market is showing no signs of easing, with stock prices persistently declining day after day.
While Cramer acknowledged that inflation remains a concern, with the Federal Reserve continuing to highlight the issue, he encouraged investors to keep in mind the underperformance of these key sectors.
“This is a market that rewards growth regardless of price. So, people will pay up for tech growth, which is all about real demand and pricing power, and they’re avoiding companies that have lost pricing power and offer yields that are too low to compete with Treasurys. I don’t expect that dynamic to change any time soon.”
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“They spent last year hurting the market and this year already many are in the red. It’s not just a continuation people, it’s actually an acceleration.”
He also highlighted that while tech stocks related to artificial intelligence and advanced computing have helped prop up the market, many other sectors have been facing significant challenges. Cramer singled out industries such as real estate, healthcare, housing, biotech, materials, and food, sectors that underperformed dramatically last year and are showing similar weaknesses this year.
“Bottom line: When you look at these super underperforming stocks, all I can say is, maybe the Fed had better be careful for what it wishes for. Companies that represent a gigantic chunk of the real economy have seen their stocks swoon. Could their earnings be that far behind, and could inflation be running its course a lot faster than expected?”
Our Methodology
For this article, we compiled a list of 7 stocks that were discussed by Jim Cramer during the episode of Mad Money on January 6. We listed the stocks in the order that Cramer mentioned them. We also provided hedge fund sentiment for each stock as of the third quarter of 2024, which was taken from Insider Monkey’s database of 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A busy shopping aisle filled with discounted items in a retail store.
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.
Overall, DG ranks 5th on our list of consumer goods and retail stocks on Jim Cramer’s radar. While we acknowledge the potential of DG as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.