Dollar General Stock Looks More Like An Opportunity, but is Always Retail

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Looks More Like An Opportunity, but is Always Retail

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About the Author: Richard Money


    1. @Value Investing with Sven Carlin, Ph.D. like you said, I’m scared of retail with players like Amazon crushing you when they want to. Although make-up is a commoditie to ladies, it’s still a risky business.
      I much prefer commodities with a big market share like ahold (recently bought more when it dropped down again).

  1. Competition is fierce with new comers. From personal experience Miniso is a superior dollar store. Too late to buy their stock now, jumped from 5 to 30.

  2. hey Sven, could you look at RTX? looks oversold due to engine failures from one of its smaller companies. Great analysis as always!!

  3. I remember shopping so much at dollar tree, but after the 25 percent price hike, I found myself buying 50 percent less items. Not sure if the price hike hurt them, but personally i buy far less, because of the hike.

  4. A couple days ago Wendover productions channel launched a video analyzing this chain of stores. Based on that I strongly disagree that they dont have a moat, they sorted out the logistic and a business model to operate in small towns and suburbs where they are literally the only store in miles, far away from other huge retails like walmart or costco. In a town of 1000 residents where this is the only convenience store in town nobody in their sane mind would even consider open a second store and compete against it, as you mentioned here retail margins are slim.

    1. Yeah saw the same video. Some people said Amazon/e-commerce is a threat but for cheap items it is not feasible to have items shipped to customers. One long term concern not mentioned might be continued declines in population in some markets that maybe won’t even make their existing stores viable.

  5. Low margin could be a moat by deterring new entrance into its market. If it can be a low cost operator and can successfully attract new customers and expand ,then it could be a good investment with scope for multiple expansion and profit growth.

  6. Thank you Sven for all your positive educational tips. Can you cover please Nagarro NA9n. It is a small cap, very followed in the Spanish-speaking community. It is down almost 70 percent so now maybe it has decent price with growth ahead. Thank you again!!!

  7. Excellent review. From time to time I need these sober reminders. I just wanted to take a deeper look as Seth Klarman bought it recently, but you saved my time. Thank you Sven! Your appearance is always very useful.

  8. My friend I like your temperament how you speak. I laugh/smile the entire video while listening you describing the Financials of the stock.

  9. The irony of ironies:
    “This is not a value investment and it has no margin of safety” – Sven
    Meanwhile, Seth Klarman, one of the best value investors and the author of margin of safety, starts a position

  10. Ty Sven !!! , a really good analysis ! very realistic ! For my part, I am entering DG around 117 USD with a small position, perhaps it can continue to go down, I think i would increase more there… Mexico is really a very good place to project growth at this moment… and also there were several purchases of insiders with these bad results… and there are so many new directors in the company, it may be that they are wanting to make money at a good price in their management

  11. Thank you for quick analysis. I want to say about the moat. DG has the moat actually. Companies business model is to open relatively small supermarkets with all the basic staff in low density rural areas. There is no Walmart, Target, Costco or Wholefoods in this areas – so they phisically cannot compete with DG. Beuaty of this business is that you litterally have no competition – there is to little people and too low income to build sonething like Walmart. Main problem of the company is stealing (because of high staff turnover). This problem can be solved by more investment in security and insurance. So name DG “just another retailer” is not completly fair.

    1. Maybe there’s a reason why other retailers won’t open up shops in villages with 78 people. Maybe DG have cracked the code and broken the system, or maybe it’s time to pay the piper in a world without free money. Seems like a fishy strategy to me, but what do I know

  12. Thanks for covering DG Sven I like the Buffet quote and whole retail industry “widow maker” view…tells a lot even before any analysis. Solid company, solid current valuation, insider buys, expanding to Mexico, still building stores in USA, not much dollar store competitors. Thing currently look very ugly, but will it forever? I ll keep it on my watch list and maybe start position after next earnings.

  13. The only retailer I own is Seven & I Holdings.
    I was lucky to get a good price in 2020.
    Any thoughts on their current valuation ?

  14. Great analysis, thanks! BUT would it not be better to use a logaritmic scale when pointing to the graph and how it has developed? And maybe combine with longer time horizon. This paints a sligthly other picture from the one presented.

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