We recently published a list of Jim Cramer’s December Portfolio: Top 10 Stocks to Watch. In this article, we are going to take a look at where Dollar General Corp (NYSE:DG) stands against other stocks to watch in Jim Cramer’s December portfolio.
Jim Cramer in a latest program on CNBC talked about the evolution of AI and how the technology has come from being ignored as “hype” to now completely changing everyday lives for many. Cramer mentioned the AI solutions offered by Marc Benioff’s company and said the technology is actually exceeding expectations “dramatically.” [read Marc Benioff’s latest comments here]
Cramer mentioned the comments of Benioff on his company’s new AI-powered solutions:
“Suddenly, though, we have Agent Force, and with it, Marc said, I quote, “We’re unleashing this new year of digital labor force for every business and every industry.” He went on to say, quote, “The implications are just simply profound. Now people ridicule me for saying how much we need AI, but Marc says, quote, ‘For decades, economic growth depended on expanding the human workforce. It was all about getting more labor,’ end quote. Not anymore—not with agents powered by AI who, as you’re stating, can work faster, doing tedious things but essential jobs that nobody wants.
And there it is—you hear that Marc got 200 deals in the first week of Agent Force alone, lots of brand-name companies too. Do you know there are thousands more in the pipeline? Real customers, real money, tangible. That’s an insane amount of business to do,” Cramer said.
READ ALSO: Jim Cramer’s Latest Lightning Round: 11 Stocks to Watch and Jim Cramer on AMD and Other Stocks
For this article, we watched some latest programs of Jim Cramer and picked 10 stocks he was talking about. With each stock we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A busy shopping aisle filled with discounted items in a retail store.
Dollar General Corp (NYSE:DG)
Number of Hedge Fund Investors: 45
Jim Cramer in a latest program on CNBC talked about BofA’s bullish note on Dollar General Corp (NYSE:DG) and said he believes the stock is bottoming.
“It looks like the stock is bottoming. I happen to like a lot of what they’re doing—they’re getting much more realistic. And I think you have to start discounting the idea that China could hurt them very badly. We had Five Below do better. I think Dollar General Corp (NYSE:DG) is the next to do better. What can I say? There’s a lot of miracles happening.”
Residents of many rural and lower-income areas often do not have easy access to large retailers like Target, Walmart, or Costco. In these regions, dollar stores frequently serve as the primary option for purchasing affordable, basic household necessities.
Dollar General is the largest dollar store group in the USA by store count, with approximately 20,300 stores currently operating. Dollar stores generally have higher gross profit margins and operating margins compared to big-box retailers such as Walmart and Target. Historically, Dollar General and Dollar Tree have generated gross profit margins of around 30% to 31%, compared to Walmart’s 25% and Target’s 28%. However, margins have taken a hit over the past several months amid competition and inflation crisis. As inflation cools, analysts are bullish on the stock for the long term. Dollar General has a better-than-average chance of emerging as a relative winner. My expectation for Dollar General in this scenario is that the group’s operating margins might improve from FY24E levels but eventually settle at a new level below the historical ~8% operating profit margin.
Broyhill Asset Management stated the following regarding Dollar General Corporation (NYSE:DG) in its Q3 2024 investor letter:
“Shares of Dollar General Corporation (NYSE:DG) lost 36% in Q3. Dollar General has historically proven to be a safe haven for investors in uncertain times as consumers trade down and increase their spending with the retailer. While inflation has certainly put pressure on DG’s core customer in recent years, the retailer has seemingly lost market share to larger competitors. The most recent earnings report highlighted this dynamic, contrary to our expectation for a weaker economic environment to benefit the company.”
Overall, DG ranks 5th on our list of stocks to watch in Jim Cramer’s December portfolio. While we acknowledge the potential of DG, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock
Disclosure: None. This article is originally published at Insider Monkey.
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