3 Key Reasons to Invest In Dollar General Corp. (DG)

Over the last few years, the Dollar Store segment has shown a remarkable outperformance. Dollar General Corp. (NYSE:DG), in particular, has become an increasingly attractive investment opportunity. In a previous article, we analyzed the risks that any potential stockholder should take into account when considering to participate in this business. In this occasion, we will look into the main reasons to believe that this company is worth our trust.

1) The growth potential of the Dollar stores concept

Although many seem to be concerned about the US economy, the fact is that, at least for Dollar Stores, the outlook is not bad at all. Even though some could argue that this business relies on a bad economy, where customers turn to Dollar Stores looking for value, the growth of disposable personal income over the last couple of years has largely benefited the segment. The key to their success could be in the fact that we are dealing with a differentiated concept, with considerable structural advantages, and plenty of growth opportunities which, by the way, have not yet reached their ceiling.

The opposite situation is the one that other players, such as supermarkets, discounters (i.e. Walmart or Costco) and drugstores (i.e. Walgreen, CVS or Rite Aid) have had to face. Undifferentiated and structurally disadvantaged, these segments have been unsuccessful in responding to the changes in consumer behavior, attributed primarily to economic cycles. These conduct modifications seem to have come to stay around for a while and, for the above mentioned reasons, the main beneficiaries of this conjunction appear to be Dollar Stores.