Dollar stores have emerged as a stunning success story over the past decade. These retailers have expanded their customer base beyond low-income clientele and have carved out a strong footprint, while others have suffered in the so-called “retail apocalypse”. Dollar store retailers remain a solid hold as we look ahead to the next decade.
Dollar General (NYSE:DG) is the leading discount retailer in the United States. It operates over 15,000 stores in 44 states. Shares of Dollar General have climbed 19.3% in 2019 as of close on June 4. The stock is up 44% from the prior year and has soared over 460% over the past decade.
Dollar General released its first quarter 2019 results on May 30. Comparable sales in the first quarter rose 3.8%. The company reported net income of $385 million or $1.48 per share compared to $365 million or $1.36 per share in the prior year. Dollar General plans to open 975 new stores in 2019 and intends to remodel or relocate 1,100 stores.
Retailers in this sector are some of the few that are dramatically expanding their brick-and-mortar footprint. There are some fears that retailers like Amazon may move in with discount options on their e-commerce platform, but Dollar General and others are moving quickly to enhance their online offerings.
Shares hit a 52-week high of $130.43 in trading this week, but Dollar General still boasts a solid forward P/E of 20. The stock last had an RSI of 67, which puts it close to technically oversold territory.
