Dollar General Corp. (DG-N)

He will never pick a bottom -- there are people who are really good at it, but it's not his strength. Underperforming since January 2023. Bad couple of days on top of a horrible 2 years. Stay away. Weak RSI and broken technicals.

He looks for fundamentals to show that something is changing for the better, accelerating numbers, and price behaviour that supports that view.

DG dropped significantly after the earnings release and is now trading at 11.8x Forward P/E, a record low compared to historical averages. The reason for the sharp drawdown was mainly due to weak operating results and a downward revision in guidance. In the 2Q, DG’s revenue grew 4% to $10.2B, missing estimates of $10.37B and EPS of $1.7 also missed estimates of $1.79. DG revised guidance in same-store sales down, which is expected to be between 1%-1.6%, a reduction from 2%-2.7% that DG previously forecasted. The company mentioned the weak results were largely due to financially constrained customers, however, both WMT and TGT reported solid numbers a few weeks ago. The balance sheet is leveraged with a net debt/EBITDA of 3.0x, which DG is paying down gradually. DG brought back the old CEO with the hopes that he could turn around the company’s operations, which have decelerated meaningfully in recent years. Overall, a very weak earnings result - we think investors are better off looking somewhere else until DG demonstrates a path to recovery.
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Valuation's today are quite attractive, may be low enough to take a bite. Not worried about US economy, it's in decent shape, and that includes all levels of income.

Dollar stores in the US are very different from those in Canada. Super-competitive in the States, with lots of DG lookalikes. It's an issue that sourcing (ie. from China) is not of concern to them. It would come down to the best valuation in the space and what returns per square footage were.

He owned it, and sold about a week ago. One of the secrets to making money isn't always being right; it's recognizing that a trade went sour and getting out. Broke support, so he took the loss based on trading discipline.

(Note the short timeframe.) Still in, but looking at getting out. Not a winner. Looking for support around $130. Unless something changes, he'll be out by next month.

He expects a good quarter on Thursday, with consumers stretching their dollars.

His work colleague likes it fundamentally. Looks as though it's built a base, and at some point it will move. Making slightly higher highs and lows. Lots of room before it hits its first level of resistance of $200+ on the chart.

His firm name is "ValueTrend" for a reason. A lot of tech and growth stocks are way overdone. Everyone's piling in due to FOMO, and that's what's driving the market. He doesn't want to be the last guy in the elevator before the cable snaps. Looks as though it's starting to break out, worst is over. 

Remember, he legs in by 2% at a time up to a full position of 6%. Old neckline is around $200. Not bad upside. If it breaks down below the last low, you sell. Good opportunity for a value play. Yield is 1.69%.

Down 47% in 2023 and an S&P dog. Shoplifting and trouble finding workers didn't help. Also, the economy didn't crumble as expected. The new CEO could turn things around. 

Company has been a "turn around story" the past year. Recent market selloff creating buying opportunity. Stores located across America which creates large footprint for retail sales. 

The question was on his preference between Dollar General and Dollar Tree in the U.S. Dollar General has cratered so it looks like a buying opportunity but actually isn't since it benefited from the pandemic and may just be returning to normal levels. This also causes him to be cautious on Dollar Tree. 

USA dollar store market very competitive. In the Canadian market, DOL essentially has no competitors so he prefers DOL. Ability to compete is hard to predict. Better options for investors in sector. 

The dollar stores have reported disappointing numbers recently, triggering a long sell-off.

Last week, they reported a bad miss and got punished. Maybe they're facing too much competition from Costco's deals.