Why Dollar General Stock Gained 13% in June
Discount retailer Dollar General (NYSE: DG) outpaced the market last month by gaining 13% compared to a less-than-1% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.
The rally lifted shares into modestly positive territory for 2018, and the stock is up significantly against the broader market in the trailing five-year and 10-year periods.
Investors responded positively to the retailer's first-quarter earnings report that was released on the last trading day of May. That announcement showed a 9% sales increase, driven by a rising store base and 2% higher sales at existing locations.
Dollar General posted slower revenue gains and a small drop in profitability as customer traffic turned slightly negative, but these challenges were mostly weather-related.
CEO Todd Vasos and his team said that the fiscal second quarter is off to a strong start and so they saw no reason to lower their sales or profit targets for the full year. Instead, they affirmed a 2018 outlook that calls for overall revenue gains of about 9% and significantly higher earnings thanks in part to lower tax expenses. Investors can expect those returns to be amplified by aggressive stock repurchase spending and a steadily climbing dividend.
10 stocks we like better than Dollar GeneralWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Dollar General wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of June 4, 2018
Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.