Shares of Dollar General (NYSE:DG) have fallen by more than 15% in 2021 while the S&P 500 has risen by 2%. Investors have been turning away from the stable, discount retailer and opting for higher growth options instead.
However, its business has been doing well amid the pandemic. When Dollar General last reported its earnings on Dec. 3, 2020, it posted net revenue growth of 17.3% with its same-store sales increasing by 12.2% from the same period last year.
Customers have been loading up on essentials with the company noting an increase in the average transaction amount, which has been partially offset with a drop in foot traffic. Its diluted earnings per share in Q3 was $2.31 and up 62.7% year over year. The company will release its year-end results later this month, on March 18, for the period ending Jan. 29.
Today, the stock trades at less than 18 times its earnings, which cheaper than the 20+ multiple it was at a year ago. For income investors, the stock also offers a modest dividend yield of 0.8% that can pad your total gains from owning the stock.
Dollar General could be a great buy this year, even if the economy recovers. Its stores can give consumers a way to keep their bills down during what might still be a tough road ahead with many jobs lost due to the pandemic and not coming back once it is over.
Over the past five years, the stock has proven to be an excellent investment, climbing nearly 140% in value.