Dollar General Corp. (DG), Dollar Tree, Inc. (DLTR): Which Dollar Stores are a Buy?

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Final Thoughts

After concluding that Dollar Tree, Inc. (NASDAQ:DLTR) and Family Dollar Stores, Inc. (NYSE:FDO) are the best within an undervalued space, I believe Family Dollar is the clear winner of having the best value.

Not only is Family Dollar Stores, Inc. (NYSE:FDO) growing the fastest, cheaper compared to sales, and has greater same store sales growth, but is also the only of the dollar stores that pays a dividend yield. The company’s 1.6% forward yield is nothing to brag about, however it is good enough to give the company a greater advantage over its peers.

On a side note, I do think Dollar Tree, Inc. (NASDAQ:DLTR) has a long-term sustainable business model (everything’s a $1) and that it will also outperform the broader market over the long-term. The company has the highest operating margins of any dollar store.

The fact that Dollar Tree’s operating margins are almost twice as high as Family Dollar, and it offers all of its products for just $1 is simply incredible. The company has a great business model, a great supply chain, and industry-best vendors. Thus, both are good, but Family Dollar is still the best!


Brian Nichols is long DLTR. The Motley Fool has no position in any of the stocks mentioned.

The article Which Dollar Stores are a Buy? originally appeared on Fool.com.

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