Comparing stock market performance of Dollar General with peers
Dollar General’s (DG) consistent financial performance and its ability to survive competition is evident in its stock market performance this year. The company has risen 16.5% so far this year as of November 27, 2017.
Competitor Dollar Tree (DLTR) has performed even better. The discount store chain is sitting at YTD (year-to-date) gains of 27.5%. The performances of the two companies reflect a positive sentiment for discount store chains despite the increasing pessimism around retail in the face of rising competition within the industry and from Amazon (AMZN).
In fact, Goldman Sachs named Dollar Tree as its top pick in the food retail sector recently, calling it “relatively immune” to the Amazon threat. The brokerage house assumed a neutral rating on Dollar General and a positive rating on Dollar Tree.
Goldman Sachs assumed a negative stance on grocers like Supervalu (SVU) and Sprouts Farmers Market (SFM). “We prefer dollar stores over grocers given they appear more immune to the sector’s challenges, for now,” said analyst Christopher Prykull of Goldman.
Supervalu is down around 50% this year, while Sprouts Farmers has gained 15% YTD. Supermarket giant Kroger (KR) is also down 33% to date.
What to expect from Dollar General’s stock going forward
Dollar General recently hit its 52-week high, following an upgrade from Deutsche Bank, which we’ll discuss in the next section. However, Wall Street doesn’t see any upside to Dollar General’s stock price over the next one year. In fact, the company’s share price is expected to fall 2% to $84.17 from the current level of $86.28. Dollar Tree, in comparison, is still expected to rise further. Wall Street sees a 7% upside for the stock.
Investors looking for exposure to Dollar General and Dollar Tree through ETFs can consider the SPDR S&P Retail ETF (XRT), which invests 2.8% of its total holdings in the two companies.