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Why Dollar General Stock Rose 44% in 2019

What happened

Dollar General (NYSE: DG) shareholders outperformed a booming market last year as the growth stock rose 44%, compared to a 29% spike in the S&P 500 index, according to data provided by S&P Global Market Intelligence.

Shares tracked ahead of the market for most of the year, but that gap widened in late August through the end of 2019.

Image source: Getty Images.

So what

Investors cheered improving financial results through the year, with comparable-store sales gains improving to 4% in the fiscal second quarter and then to 4.6% in Q3. That third-quarter report was especially good news for the business, as it included the value retailer's best customer traffic rate in almost five years.

Now what

CEO Todd Vasos and his team are now projecting comps of nearly 4% for the full fiscal year, which is slightly higher than management's late-August forecast. Improving profitability, meanwhile, is supporting notable earnings growth. Dollar General is spending cash on its dividend and stock buyback channels, but given its robust traffic boost, the chain is directing most of its excess resources toward aggressively expanding its store base, with 1,000 store openings projected for fiscal 2020.

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Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


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