Thread by @3L3V3NTH

-Why I bought Dollar General (DG) on earnings and where I predict it to go from here-

Dollar General is a brand that is in rural markets-

They have positioned stores across the country with a goal of 5000 stores delivering fresh food market options-

The positioning of

these stores is what proves most important.

The location of the stores is closer to the rural customers that used to travel over 1+ hour to shop at a Walmart because all of the smaller B&M grocers have been put out of business.

Their current growth rate will increase even

into the recession. Brand awareness will grow and buyers who used to drive long distances to shop every two weeks at Walmart will visit (DG) once a week.

The buyer experience inside of a (DG) store is more personable which suburban/rural buyers prefer.

The selection is ample

for the Markets they serve.

The placing of the stores and footprint was also intelligently selected.

The logistics of the store routes properly established. Low waste in delivering goods to the stores.

I would just like to emphasize that in a recession this business will

do better than most.

They are not selling (Dollar items) they have migrated to being a small grocery in the last (10 miles.)

Proximity to consumer in recession is of utmost importance.

The stores are organized enough to keep the consumers happy with the experience in store.

Per quarter I expect a transfer of 2-5% of rural users to migrate to the (DG) hub for all purchases non large item related $100<

(This will hurt Walmart exponentially and fast) ~More on this later~

Marketing- (DG) could go on a aggressive marketing campaign in rural markets

capitalizing on their store build outs. I think this will happen before the recession fully bites which will get customers in the door before their pockets are so tight they don't take risks at a new vendor.

Their supply chain isn't heavily influenced by foreign markets and

they don't have a surplus of garbage inventory.

Questionable- I am not sure their loss prevention has been adequately built out as they scaled up stores - This can be fixed easily if it becomes a problem during recession.

Local leadership training of management and team

building of employees. This also can be taken care of with little cost and isn't so bad that customers leave from poor experience but it should be understood all customers do not have 'great' but moderate experience.

With those questionable items being said- Most of the other

options these customers have also have poor customer experiences in their store visits. So (DG) will still win out due to distance from customer and products available.
These customers don't want anything fancy they just need a consistent experience with the products they want.

Most analysts over the coming weeks will move (DG) into a buy rating at $130-155 price target.

I agree that (DG) is a buy however my target is $170 Jan- 2021

This price target will change depending on market and overall economy.

However the worse the economy gets my target

will move higher.

At time of this analysis -$127.28 (DG)

Dollar General built an empire on no-frills stores. Now it's going high tech
cnn.it/2W02F1U

Dollar General's Growth And Rising Dividend Make It My Top Choice In Retail seekingalpha.com/article/426795…