Dollar General. Mandel and his team bought about 5 million shares of Dollar General Corp. (NYSE:DG), which was more than a 50% increase in the size of their position. Dollar General has underperformed the S&P over the last year as hype over dollar stores as dwindled, and it now trades at 17 times trailing earnings. This is despite the fact that Dollar General experienced double-digit growth rates in both revenue and earnings in its most recent quarter compared to the same period in the previous fiscal year. Lee Ainslie’s Maverick Capital has also been a major investor in Dollar General (check out Ainslie's stock picks).
We think that Dollar General, Priceline, and eBay all have earnings growth rates which are high enough to make them worth a closer look, though it’s certainly the case that the latter two stocks have prices which already assume substantial growth over the next few years. Apple continues to look like a good value to us, as we would guess that it should be able to keep its earnings about steady. We like Google’s search business but think the company is better placed on a watch list until the Motorola acquisition has actually started to positively affect the bottom line.
Disclosure: I own no shares of any stocks mentioned in this article.