Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19
Stocks Market Investors Worried About the Fed? Don't Be -- Here's Why - 13th July 19
Could Gold Launch Into A Parabolic Upside Rally? - 13th July 19
Stock Market SPX and Dow in BREAKOUT but this is the worrying part - 13th July 19
Key Stage 2 SATS Tests Results Grades and Scores GDS, EXS, WTS Explained - 13th July 19
INTEL Stock Investing in Qubits and AI Neural Network Processors - Video - 12th July 19
Gold Price Selloff Risk High - 12th July 19
State of the US Economy as Laffer Gets Laughable - 12th July 19
Dow Stock Market Trend Forecast Current State - 12th July 19
Stock Market Major Index Top In 3 to 5 Weeks? - 11th July 19
Platinum Price vs Gold Price - 11th July 19
What This Centi-Billionaire Fashion Magnate Can Teach You About Investing - 11th July 19
Stock Market Fundamentals are Weakening: 3000 on SPX Means Nothing - 11th July 19
This Tobacco Stock Is a Big Winner from E-Cigarette Bans - 11th July 19
Investing in Life Extending Pharma Stocks - 11th July 19
How to Pay for It All: An Option the Presidential Candidates Missed - 11th July 19
Mining Stocks Flash Powerful Signal for Gold and Silver Markets - 11th July 19
5 Surefire Ways to Get More Viewers for Your Video Series - 11th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

How to Profit From 46 Million American's on Food Stamps

Companies / Investing 2013 May 02, 2013 - 12:40 PM GMT

By: Money_Morning

Companies

David Mamos writes: With over 46 million Americans on food stamps, price-conscious shoppers have been flocking to the discount stores.

It's a profitable and steady niche in what has become a "food stamp economy."

It's lead by the big-box discounters such as Wal-Mart (NYSE: WMT) on one end and a trio of high-rising "dollar" stores at the other --Family Dollar Stores (NYSE: FDO), Dollar Tree (NASDAQ: DLTR) and Dollar General (NYSE:DG).


Since the start of the financial crisis, all of these discounters have seen their share prices skyrocket as consumers work overtime to stretch each and every dollar.

My favorite company in this group is Dollar General Corp., which has seen its share price climb by 129% since its IPO in November 2009.

The question, of course, is whether or not Dollar General still has what it takes to stay in Wall Street's good graces and keep on growing.

Part of that answer depends on what your perception is about the overall state of the U.S. economy. The data is certainly a mixed bag.

But what I can tell you about Dollar General is how it differentiates itself from the competition and how the discounter will be able to hang on to shoppers even when the economy turns.

Here's why I like this company so much...

The Winner in a Fierce Competition
One big reason is its massive expansion.

Dollar General currently has 10,500 stores primarily in lower-income neighborhoods. Last year the company opened 625 new stores and this year will expand even further with another 630 stores.

That's 1,255 new stores in just two years.

One state where Dollar General has a very minimal presence, and where it plans to focus a great deal of effort in the months ahead, is California.

Surprisingly, California has a few more loopholes that make it easier to qualify for food stamps. And now an outreach effort to get those who may not know that they are eligible to receive food stamps is starting to make some headway as well. While nearly 3.5 million Californians are eligible for food stamps, only 55% are actually on the program.

The state now estimates that these numbers are bound to increase. For Dollar General this will undoubtedly translate into additional sales as more struggling families find their way into the new stores.

As for the stores already in existence for a year, the future looks bright there as well.

Dollar General has an achievable same-store sales target of between 4% and 6% for 2013, along with a total sales growth estimate of 10% to 12%.

One way that Dollar General sets itself apart from the Wal-Marts and the Targets (NYSE: TGT) of the world is by placing a number of its stores in rural and suburban areas where the nearest Wal-Mart is quite literally a gas-burning drive away.

Customers are Marching into Dollar General
As with all dollar stores, Dollar General has the stigma that most of the products it sells are inferior. Dollar General, as the name implies, does have a slew of items that are priced at one dollar or lower.

However, that accounts for only 25% of its inventory.

Dollar General stands apart from some of its rivals in the dollar category by offering deeply discounted prices on name brands such as Coca-Cola, Kellogg's, Procter & Gamble, Kimberly Clark, Unilever, General Mills, Nabisco and PepsiCo.

These prestigious name brands, with the abundant advertising behind them, breed brand loyalty and are a big plus for Dollar General.

So even if the economy were to take a miraculous turn for the better, Dollar General will still be able to benefit from this customer loyalty and not have to worry as much about its customers being turned off by the "dollar" stigma.

Dollar General also expanded its private label products, which obviously have far better profit margins. The company is adding more coolers and freezers to accommodate for the increased product line as well as the increased consumer demand. It has also remodeled or relocated hundreds of stores to accommodate these changes.

Another factor driving more traffic (unfortunate or otherwise) into these stores is the introduction of cigarette sales. These sales have the effect of bringing customers into the stores more frequently, and by doing so they are more likely to buy a few extra items.

Tallying it Up at the Register
I could break down the financials and the charts of this stock for you, but the fact is Dollar General is uniquely placed amongst its rivals, and has shown great strides in improving both its top and bottom line.

That's why its share price is up so big over the last four years. It's a fundamental growth story.

As Dollar General's CEO stated in the most recent conference call, "When times get tough is when the customer needs us even more. I think part of the reason I'm so bullish on '13, it's very probable things are going to be a little harder out there."

And even if the economy were to turn for the better, I believe that there won't be an all-out exodus from Dollar General's stock.

In a hard economy, it simply pays to be a BUYER of Dollar General.

[Editor's Note: If you have a stock you would like to see us analyze in a future issue, leave us a note in the comments below and we'll add it to our list.]

About the Author: David Mamos brings nearly 15 years of analytical experience to the table with a background ranging from big-picture fundamental analysis to highly technical trading decisions. He began his career working as a financial advisor with Royal Alliance in 2001 and helped clients with portfolio management as well as buy-sell decisions before transitioning to the development, implementation and execution of trading strategies for aggressive investors.

Source :http://moneymorning.com/2013/05/02/buy-sell-or-ho...

Money Morning/The Money Map Report

©2013 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules