I have actually looked at DG stock a year earlier and said how it is just deflating from the retail exuberance of 2021 and 2022. However, the market always tends to overshoot on the liveliness but also on the negativeness. At the moment, DG stock is severely down, but really cheap with capital yields around 10%. If US retail isn't doomed, it appears a low rate to get this growth retail stock.
Previous DG Video from 2023
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Sven, I agree on the value of DG but am waiting for reports as I anticipate lower quarterly earning this year with the stock price taking a hit and lower cost basis. I have held and sold DG in the past and will continue as long as management continues making good decisions.
Thanks for sharing
Exuberance! My broker should have had same outlook before he bought NVO at top. Not enjoying the slide down 😢
thanks for sharing!
Thank you Sven. I got 300 shares of DG when it dipped to around $80. I think next earnings will be better because of the coming holiday season shopping
Short term cash flows are priced in:)
thanks for sharing!
Energy Fuels Inc
NYSEAM:UUUU 35% +
CUE BIOPHARMA
NASDAQCM:CUE 360% +
Time to repay net debt is around 10 years with recent FCF numbers. On an EV basis it takes your 20 years to get your money back. I would never buy the whole company but at 10% FCF yield a 2x in the next 5 years is certainly possible. Especially when rates come down.
companies never plan to repay debt
@@Value-Investing Ok but Buffett told me I should act as if I buy the whole company 🤔. Maybe I should instead just pick up some shares, hope for a double and let the next one with the debt.
Thanks. I appreciate your analysis on this Dr. Carlin. Tough to be a value investor in an overvalued market.
value investing is never liked, nor easy!
Sven, thanks, now considering this a buy for myself. Just a small remark, the drop in Net Income seems to have been more impacted by the increase in operating costs (Selling, etc) than by the drop of cost margin. As revenue continues to increase and management could potentially trim down a part of their operating costs, I wouldn’t be surprised if net income is back to the $2B level in a year or so and growing from there.
Hi Sven, how do you think the Trump’s tarrif plans impacting DG in the longer term? Won’t it further squeeze the margins?
we will see!
Thank you Sven. Great analysis as always. Could you please analyse Heineken and Carlsberg?
Yes, soon
what do you think about Celanese Sven?
With almost certain tariffs coming I don’t see any discount retail stores doing well. Especially if they sell cheap stuff from China.
thanks for sharing!
If you look at the breakdown for discretionary vs consumables between Dollar General and Dollar Tree, Dollar General has a 53:47 and dollar general has a 19:81 split (Source CNBC Why dollar stores are sruggling). Tarrifs would hurt discretionary items more than consumables since consumables are food products generally produced in the USA or imported from nearby countries while discretionary are mainly Made-in-china products, so in my mind, tarriffs, if they do pass which I don’t think the 10% overall would pass, would hurt dolalr tree more than dollar general so while dollar general might have lower revenues or earnings depending on whether they push costs onto consumers, DG could gain some market share over DT.
I actually added to my $DG position to a total of 100 shares yesterday. Sold a June 20, 2024 $105 covered call for a premium of $415. Easy money really.
Maybe give Aflac a look? It has good P/E and good eps growth, buy steady declining gross revenue.
sorry, I don’t do insurance 🙁
Hi Sven,
What about DGs debt of 24billion usd, considering they only have 6,7 billion in equity, and they only make 1,6 billion in profit a year. Seems like with an interest rate of 4% they are paying a billion in interest a year. What are you thoughts about this, am I overseeing something perhaps?
is it leasing or just debt?
They have 6B of actual debt
Thank you Sven! Great analysis as usual.
Glad you liked it!
Can someone explain to us non USA citizens, how the business model works? How can a small chain be competitive without the economies of scale against Walmart, Costco etc? Do they have some competitive advantage?
it is the cheap bulk things I think±
This is a quality and intresting question! You can study this, with this main question in head. Look up their vision, mission and is it in line with their enterprise strategy, find out strength/ weakness/ oppertunities/ Threats compared to their competitors. Product brands and productlifetime… There is much more to figure out for sure.
All in all its a good approach to find out if its a worthy investment for long term compared to its competitors. But the market is fast and the approach that Sven Does is quick and sticks to its scope. Because the way I set it out now does not “really” fit for investing, because its more like business entrepreneurship, which helps the business but does not particually have to help and increase the price of its stock.
In my opinion you are right, Dollar General doesn’t really produce anything and they just sell. So as an investor you are better of to buy its bigger competitor. Also I really like that you asked a very important question for a qualitive study in this comment section, which isn’t seen a lot here.
I absolutely agree. This has it all and a brutal divergence in a wave 5 of C structure
thanks for sharing!
It is incredibly important to remember that when analysts talk about risk they are referring to quarterly performance bonus risk and when they say long-term they mean the quarter after this quarter.
Thank you again for your book which I received a couple years ago through a giveaway. I was surprised to receive it given how remote I live.
My son is now interested in and is investing. The book will be on his study list along with many of your referenced books on my bookshelf.
Thank you for all you do.
Cheers from Canada!
Funny you make a video like this right after I opened a position in DG a few weeks ago at 80$! I was trying to decide between DG and DLTR and in the end i bought a little bit of both. DG has a little too much debt so it had to stop the buyback exactly at the wrong moment, i would prefer if they stop the dividend instead, and it seems they have also some personnel related problems that they’re trying to solve. DLTR seems to be in a similar situation, with less debt and a problem with their Family Dollar branch. Pretty good ROIC with both of them but I think people are underestimating their earnings potential, if you take away their “Growth Spending” they will be a lot more profitable and the room for espansion in the US is pretty low, they will be everywhere in the US in a couple more years, all that growth capex will go away and they should improve their margins… On the contrary i’m still a little bit on the sideline with ULTA, they sell expensive items and in the last recession in the GFC they didn’t do as well… I will wait probably a SUB 300 price for more margin of safety! Thank you for your work as always Sven! 💪
I agree, stop the dividend, restart the buybacks
I follow DG closely all I see is lack of investor sentiment. Right now every investor is focusing on technology. I don’t own any share but there’s potential here for long term holders.