Dollar General (DG) Is Water-Logged And Getting Wetter Today
Trade-Ideas LLC identified Dollar General ( DG) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Dollar General as such a stock due to the following factors:
- DG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $209.5 million.
- DG has traded 291,416 shares today.
- DG traded in a range 206.5% of the normal price range with a price range of $3.03.
- DG traded below its daily resistance level (quality: 4 days, meaning that the stock is crossing a resistance level set by the last 4 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).
Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.
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More details on DG: Dollar General Corporation, a discount retailer, provides various merchandise products in the southern, southwestern, midwestern, and eastern United States. The stock currently has a dividend yield of 1.2%. DG has a PE ratio of 21. Currently there are 15 analysts that rate Dollar General a buy, no analysts rate it a sell, and 3 rate it a hold. The average volume for Dollar General has been 2.9 million shares per day over the past 30 days. Dollar General has a market cap of $23.6 billion and is part of the services sector and retail industry. The stock has a beta of 0.79 and a short float of 2.7% with 3.11 days to cover. Shares are up 15.4% year-to-date as of the close of trading on Tuesday.
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Analysis:
rates Dollar General as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company shows low profit margins. Highlights from the ratings report include:
- DG's revenue growth has slightly outpaced the industry average of 4.7%. Since the same quarter one year prior, revenues slightly increased by 7.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- DOLLAR GENERAL CORP has improved earnings per share by 11.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, DOLLAR GENERAL CORP increased its bottom line by earning $3.95 versus $3.50 in the prior year. This year, the market expects an improvement in earnings ($4.56 versus $3.95).
- Net operating cash flow has increased to $597.45 million or 25.99% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -6.56%.
- The current debt-to-equity ratio, 0.55, is low and is below the industry average, implying that there has been successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.08 is very weak and demonstrates a lack of ability to pay short-term obligations.
- You can view the full Dollar General Ratings Report.
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