Wal-Mart Stores, Inc. (WMT), Walgreen Company (WAG) and Dollar General Corp. (DG): What Should You Buy?

We can work with discounts too

The Dollar General Corp. (NYSE:DG) has been able to run its every-day-low-pricing scheme successfully and is effective at generating a consistent stream of customers in its retail locations. The company plans to expend $575 million to $625 million in capital expenditures in 2013. Almost 50% of the capital spending is on investments in store growth and development. Another 30% is for distribution, transportation, and special projects. The remaining 20% of capital expenditure spending is for maintenance.

Dollar General Corp. (NYSE:DG) operates a working business model and has plans of improving the overall shopping experience of being at one of its stores. The company trades at a 17.7 earnings multiple, which is a little pricey. But the company makes up for it with analysts on a consensus projecting the company to grow earnings by 15.4% on average over the next five years. The company’s earnings growth is reasonable when considering the historical consistency of the company’s growth.

Conclusion

Going forward Walgreen Company (NYSE:WAG) has the potential of being one of the most lucrative investment opportunities in the retail sector. The company plans on using leverage to grow sales and net income. While some people find that unappealing, I find it thoughtful and lucrative because the company has a successful track record of running and operating stores.

That being the case, Dollar General Corp. (NYSE:DG) is another compelling investment opportunity. Dollar General Corp. (NYSE:DG) isn’t projected to grow as fast as Walgreen; on the other hand, the company has been paying down its total long-term debt, which is why the company has a lower growth rate when compared to Walgreen.

If Walgreen and Dollar General Corp. (NYSE:DG) sound a little too risky, fear not, we can always fall back on Wal-Mart Stores, Inc. (NYSE:WMT).

The article Wal-Mart, Walgreen and Dollar General: What Should You Buy? originally appeared on Fool.com and is written by Alexander Cho.

Alexander Cho has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Alexander 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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