Trade-Ideas LLC identified

Dollar General

(

DG

) as a weak on high relative volume 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 $227.8 million.
  • DG has traded 2.2 million shares today.
  • DG is trading at 32.06 times the normal volume for the stock at this time of day.
  • DG is trading at a new low 4.02% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on DG:

TheStreet Recommends

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 2. Currently there are 12 analysts that rate Dollar General a buy, 1 analyst rates it a sell, and 6 rate it a hold.

The average volume for Dollar General has been 2.4 million shares per day over the past 30 days. Dollar General has a market cap of $21.9 billion and is part of the services sector and retail industry. The stock has a beta of 1.33 and a short float of 2% with 1.93 days to cover. Shares are up 8.5% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Dollar General as a

buy

. 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 6.7%. Since the same quarter one year prior, revenues slightly increased by 8.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 25.81% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, DG should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • DOLLAR GENERAL CORP has improved earnings per share by 16.7% 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 $3.50 versus $3.17 in the prior year. This year, the market expects an improvement in earnings ($3.95 versus $3.50).
  • Net operating cash flow has increased to $343.89 million or 36.75% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 6.33%.
  • The current debt-to-equity ratio, 0.50, 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 0.11 is very weak and demonstrates a lack of ability to pay short-term obligations.

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