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Dollar General stock has rallied 30.5% in 2020, and JPMorgan analyst Matthew Boss sees shares of the discount retailer rising another 12% from the current market price.
Georgesheldon/Dreamstime
Dollar General
stock has rallied 30.5% in 2020, and JPMorgan sees more gains ahead.
Analyst Matthew Boss reiterated an Overweight rating on Dollar General (ticker: DG) on Friday, while boosting his price target to $250 from $230. The new target price is about 12% higher than the current market price. His increased confidence stems from his recent conversations with executives at the firm, including Chief Financial Officer John Garratt, who outlined a path for growth well beyond the pandemic.
While coronavirus-related high unemployment and economic uncertainty has helped discounters this year, Dollar General was seeing strong momentum even before the Covid-19 crisis. Garratt emphasized that this pattern, along with robust results throughout the pandemic, has led Dollar General to be “really well-positioned,” even relative to its historical rate of growing comparable sales.
Boss highlights the company’s “tried-and-true new-customer playbook to drive stickiness post-pandemic,” as well as its focus on value—more relevant to consumers than ever given the shaky state of the U.S. recovery. He was heartened to hear Garratt outline how the company has attracted new customers even in higher income brackets, as well as digitally savvy consumers.
Like many retailers, Dollar General offers click-and-collect ordering, which Boss believes will help the company retain shoppers its attracted during the pandemic, especially given the power of habits formed in recent months.
He notes that Dollar General is looking to take market share from a variety of competitors, including drug stores, grocery stores, convenience stores, and its dollar store rivals. In addition, he highlights the fact that Dollar General is seeing shoppers buy more than just essentials, with categories, such as home décor and seasonal merchandise.
Dollar General stock is up 8% since Barron’srecommended it this summer. The company is an analyst favorite and reported a strong second quarter last month.
The shares are 0.7% higher to $205 on Friday morning.
Write to Teresa Rivas at [email protected]
