Trade-Ideas: Dollar General (DG) Is Today's Unusual Social Activity Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Dollar General ( DG) as an unusual social activity candidate. In addition to specific proprietary factors, Trade-Ideas identified Dollar General as such a stock due to the following factors:

  • DG has 17x the normal benchmarked social activity for this time of the day compared to its average of 2.97 mentions/day.
  • DG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $219.6 million.

Identifying stocks with 'Unusual Social Activity' tends to be a valuable process for traders looking to capitalize on the 'talk of the town' stocks that are basking in far more attention from the StockTwits financial community than normal. Good press? Bad press? It ultimately doesn't matter if it's good or bad if you know how to trade around the sentiment. Certain hedge funds use such data for their proprietary algorithms and it is not uncommon to see shared social sentiment play itself out in a stock's price trend.

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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. DG has a PE ratio of 21. Currently there are 9 analysts that rate Dollar General a buy, 1 analyst rates it a sell, and 8 rate it a hold.

The average volume for Dollar General has been 3.3 million shares per day over the past 30 days. Dollar General has a market cap of $22.3 billion and is part of the services sector and retail industry. The stock has a beta of 1.19 and a short float of 1.5% with 1.88 days to cover. Shares are up 4% year-to-date as of the close of trading on Friday.

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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, increase in net income 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 2.1%. Since the same quarter one year prior, revenues slightly increased by 9.9%. 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 33.98% over the past year, a rise that has exceeded that of the S&P 500 Index. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • DOLLAR GENERAL CORP has improved earnings per share by 15.8% 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).
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Multiline Retail industry average. The net income increased by 10.3% when compared to the same quarter one year prior, going from $322.17 million to $355.37 million.
  • Net operating cash flow has slightly increased to $474.20 million or 4.79% when compared to the same quarter last year. Despite an increase in cash flow of 4.79%, DOLLAR GENERAL CORP is still growing at a significantly lower rate than the industry average of 104.17%.

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