Is Dollar General (DG) A Smart Long-Term Buy?

LRT Capital Management, an investment management firm, published its third-quarter 2021 investor letter – a copy of which can be downloaded here. A return of -6.71% was recorded by the LRT Economic Moat strategy for the month of November 2021, extending its 12-month returns to +23.06%. Year-to-date, LRT Capital was able to post a gain of +17.91%. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.

LRT Capital Management, in its Q3 2021 investor letter, mentioned Dollar General Corporation (NYSE: DG) and discussed its stance on the firm. Dollar General Corporation is a Goodlettsville, Tennessee-based variety store company with a $51.5 billion market capitalization. DG delivered a 5.75% return since the beginning of the year, while its 12-month returns are up by 7.64%. The stock closed at $222.40 per share on December 10, 2021.

Here is what LRT Capital Management has to say about Dollar General Corporation  in its Q3 2021 investor letter:

Executive Summary

At LRT Capital Management we are continuously searching the market for great investment opportunities. Our favorite finds are companies with moats and growth opportunities that justify a higher price than what the stock is trading for. One of our holdings (approximately 1.5% of our long exposure) is Dollar General (DG), so today, we wanted to tell you a bit about this great company.

Company Overview

Dollar General is a discount retailer with the largest brick-and-mortar presence in the United States by store count. The company’s largest concentration of stores can be found in the southern, southwestern, midwestern, and eastern parts of the United States.10 Dollar General was founded in 1939 by J.L. Turner, who originally named the company “J.L. Turner and Son, Wholesale”.  As the name suggests, the company began its life as a wholesaler, but quickly turned to a retailer of general store goods. By the early 1950s, the company had annual sales of $2 million per year,12 which is the equivalent of $22.95 million in 2021 dollars when adjusted for inflation.

The first Dollar General store opened on June 1st, 1955 in Springfield Kentucky. The simple concept was that no item in the store would cost more than one dollar. The company changed its name to Dollar General Corporation in 1968 when Dollar General became publicly traded. At the time of its initial public offering, the business generated more than $40 million in annual sales. The company’s common stock was publicly traded from 1968 until July 2007, when it was taken private by KKR. The company went public again in November 2009, under the ticker DG.

Today, Dollar General is an evolved, and phenomenal business with more room for growth. Annual sales reached a record $33.7 billion in fiscal year 2021 after consecutively growing the top line for many years. The company’s main products are every-day necessities and consumables purchased by lower income consumers on tight budgets…”



Based on our calculations, Dollar General Corporation (NYSE: DG) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. DG was in 46 hedge fund portfolios at the end of the third quarter of 2021, compared to 45 funds in the previous quarter. Dollar General Corporation (NYSE: DG) delivered a 1.99% return in the past 3 months.

Earlier this year, we also shared another hedge fund’s views on DG in another article. You can find more than 100 investor letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q3 page.

Disclosure: None. This article is originally published at Insider Monkey.