Should You Invest in Dollar General?

PHOTO CREDIT: Dollar General

OVERVIEW

Dollar General incorporation is a company based in the United States. The company operates a chain of dollar stores across the United States. In these stores, the company sells household, personal care, and grocery products at extremely low prices (hence the name Dollar General). The company operates over 17,200 stores in 46 states. The company was founded in 1939.

Why You Should?

1. COVID-19 stimulus will continue to benefit the company’s results over the next quarter and has helped the company reach a record year in 2020. This is because the company’s customer base is more likely to get stimulus from the government which will be spent at stores like Dollar General.
2. Dollar General is an extremely safe investment option in an investor’s portfolio. This is because they sell cheap products which are essential to maintain a high quality of life. This means that the company will do well and remain stable during economic downturns and will continue to grow during strong economic times as well. This will benefit investors in the company.
3. Dollar stores like Dollar General are rising in popularity. In fact, over 50% of new store openings this year will be dollar stores and one in three of all store openings in the nation will be Dollar General stores. The rising popularity of Dollar General will help the company see rising sales and will also benefit investors in the company.
4. The company has seen rising revenues and profits over the past couple of financial years due to the reasons mentioned above. This has helped the company grow and expand its presence across more markets and has. also benefited investors in the company. In the financial year of 2020, the company reported revenues of around 33.75 billion and profits of around 2.66 billion. Both of these metrics are higher than what the company reported in the financial year of 2019 when they had revenues of around 27.75 billion and profits of around 1.71 billion.

PHOTO CREDIT: Yahoo Finance

Why You Should Not?

1. The company faces tough competition in the discount retailer industry. Some of these competitors include Walmart, Dollar Tree, and many others. This competition might hurt the company and its investors in the future.
2. The company faces a negative political environment. Many local counties and cities do not want companies like Dollar General to open more stores in their communities because of the lower quality of products that the company sells for far lower prices than small businesses. Thus has hurt some aspects of the company’s business and might also hurt investors in the future.
3. The company usually does not have high margins due to the high costs of the products sold and the low prices that the company sells these products for. Though the company had a great 2020 (in terms of profitability), they need to continue to build these profit margins. If they see falling profit margins, then it might hurt the company and its investors.

MY OPINION

I think that Dollar General is a great long-term investment due to COVID-19 stimulus, its position as a safe investment option, its rising popularity, as well as rising revenues and profits. However tough competition, a negative poitical environment, and low margins might hurt the company and its investors in the future.