As Dollar General Corp DG gets ready to release positive second-quarter numbers before of Thursday's opening bell, the stock may reach new all-time highs this week.
Since Q1 2020, the discount retail behemoth has outperformed Street expectations nine out of the ten times. Investors are now pricing in a significant swing for Dollar General stock, with a potential implied move of 7.7% either way, based on movements in the options market.
The Call: 28% return potential
“I am bullish on DG so long as the stock remains above $228.00-$230.00,” analyst Gianni Di Poce wrote in his weekly “Benzinga Pro Insider Report.” “The upside target is $325.00-$328.00.”
“Valuation is at a pretty fair level,” the analyst said. “With P/E at 26, Price-to-Sales at 1.72, and an EV to EBITDA of 19.55.”
From a technical standpoint, the stock is consolidating within an ascending triangle pattern. A close above resistance could lead to a resolution higher in the uptrend from this continuation pattern.
With more than 18,000 locations nationwide, Dollar General has overtaken other retailers to claim the title of largest U.S. retailer by number of locations, according to Forbes.
It is not done growing yet. The Tennessee-based company announced a renewed expansion effort in late-July with three new distribution centers in Arkansas, Colorado and Oregon. The move is expected to strengthen Dollar General’s internal supply flows as the country still struggles with supply chain issues.
Aside from new distribution centers, the company is making significant internal changes with one new addition to the company board of directors, and long time CEO Todd Vasos being succeeded by Jeffery Owen.
Other Analyst Ratings: Truist Securities recently affirmed its hold rating on DG, and BMO Capital downgraded the stock to market-perform.
Price action: Shares of Dollar General climed 0.74% to $249.42 intraday Wednesday, according to data from Benzinga Pro.
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