Dollar General Corporation (DG): A Bull Case Theory

We came across a bullish thesis on Dollar General Corporation on Rijnberk InvestInsights’s Substack by Daan | InvestInsights. In this article, we will summarize the bulls’ thesis on DG. Dollar General Corporation's share was trading at $143.43 as of January 30th. DG’s trailing and forward P/E were 24.49 and 19.96 respectively according to Yahoo Finance.

Dollar General Corporation is a leading U.S. discount retailer with a deeply entrenched position in serving value-conscious consumers, particularly in rural and underserved communities. Founded in 1939 and headquartered in Tennessee, the company operates over 20,900 small-format stores across the U.S., capturing roughly 58% of discount retail foot traffic and more than 60% of category sales alongside Dollar Tree.

Its model is built on a disciplined cost structure, a highly efficient supply chain, and a product mix heavily skewed toward everyday essentials, with consumables and health and personal care items accounting for over 80% of sales. This focus drives high-frequency visits, stable demand, and a defensive, often countercyclical revenue profile.

Dollar General’s true differentiation lies in its dense rural store network, with approximately 80% of locations in communities under 20,000 people and stores within five miles of 75% of the U.S. population. This proximity creates a geographic moat, allowing the company to compete more on convenience than absolute price while maintaining attractive store-level economics.

Ongoing initiatives such as Renovate and Elevate are improving execution, reducing shrink, and lifting productivity, supporting gradual margin recovery from cyclical lows. Recent results reflect this progress, with consistent mid-single-digit sales growth, improving margins, strong free cash flow generation, and active debt reduction.

Looking ahead, Dollar General is positioned to deliver 2–3% comparable sales growth and 4–6% total revenue growth, translating into roughly 10% earnings growth as margins normalize. However, after a sharp rally, valuation already reflects much of this recovery. At current levels, a fair long-term view implies a target price of $150, representing an implied CAGR of roughly 4% including dividends. While not a compelling deep-value opportunity, Dollar General remains a solid, defensive long-term buy for investors seeking resilience, steady compounding, and reliable cash flows.

Previously, we covered a bullish thesis on Dollar General Corporation (DG) by Tyler Moody in October 2024, which highlighted margin compression from pressured low-income consumers and the potential for recovery as conditions normalized. DG’s stock price has appreciated by approximately 78.43% since our coverage as the thesis played out. Daan | InvestInsights shares a similar view but emphasizes valuation normalization and more modest forward returns.

Dollar General Corporation is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 54 hedge fund portfolios held DG at the end of the third quarter which was 55 in the previous quarter. While we acknowledge the potential of DG as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.