Dollar General is a hold as mini breakout gets underway
- Dollar General has returned 22% in a month.
- The stock has an outperform rating at Oppenheimer and is rated a buy by Morgan Stanley.
- Dollar General stock eyes a breakout and could rise to find new highs.
Dollar General Corporation (NYSE:DG) has positive prospects in the shorter and longer-term. These were the assertions of Oppenheimer analysts about one week ago. The analysts pointed out that Dollar General’s client base remains resilient despite the high inflation. However, they did observe that consumers are intentional with their purchases as costs soar.
Dollar General is a consumer product assortment retailer. However, unlike large peers such as Walmart, it offers limited product categories. Being a discount retailer makes Dollar General unique and able to thrive in the tough macro-environment.
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Consumers are looking to shop cheaper as inflation lowers their disposable incomes. In its latest quarter, the company outperformed estimates while giving a better than projected outlook.
Dollar General’s strengths are underlined by recent stock gains. In the last month, the stock is up more than 22% and is still going higher. Positive comments by Oppenheimer just reinforced the growth outlook which was in place.
The analysts gave the stock an outperform rating. At the same time, Morgan Stanley recommends a buy of the stock. The strategists cited the risks of a recession as a likely growth trigger for Dollar General. We believe the fundamentals align with technicals for a higher price.
Dollar General eyes a break above minor resistance at $237
Technically, Dollar General is eyeing a breakout of minor resistance at $237. The 50-day and 100-day moving averages offer support below. We believe the recent upgrades and fundamentals support a rise in price. Investors should hold the stock to the $260 valuation. New buyers should consider adding positions on a potential retracement at or above the 50-day MA.
Dollar General is a hold as bullish momentum is underway. The stock is supported by strong momentum. Buyers should take advantage of retracements to add positions.
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