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Tuesday, 07/03/2001

DG - Dollar General

Company Description

Dollar General Corporation (NYSE:DG) is a customer-driven distributor of consumable basics, serving low, middle and fixed income families. The company's more than 5,000 stores throughout the Middle and Southeastern United States offer quality merchandise at everyday low prices.

The company believes continued profitable growth for its shareholders will accompany its commitment to better serve customers. The company is reaching more customers than ever before, with a powerful mix of high-turn merchandise. As the company expands, it is supporting growth through investments in distribution, technology and people. Their strategy is to leverage its investments to control overhead while increasing profits. Dollar General has consistently achieved increasing sales, earnings and operating efficiency while significantly lowering operating expenses.

(source: Dollar General)

Reasons To Invest

There's no denying that Dollar General has had its share of problems recently. In fact, in late April, the company announced that it would be forced to restate its financial condition for the fiscal year between 1998 and 1999. According to the company's preliminary investigation, it reported that it would reduce its earnings by 7 cents during that period. The accounting irregularities uncovered by Dollar General's management are obviously a major cause for concern and resulted in a slew of class action lawsuits.

Despite the controversy surrounding the company, there are several bullish reasons to take a closer look at shares of Dollar General at current levels for investment purposes. For starters, several key insiders have acquired shares of the stock following the company's announcement of its problems. During the month of May, three officials acquired stock in their company which displayed their respective long-term optimism. It generally pays to invest with the directors of a company, and Dollar General's executives' purchases suggest that much.

Furthermore, the nature of Dollar General's business and the merchandise that it sells is very conducive to the current economic environment. As consumers cut back on spending, they seek out cheap prices for goods. And Dollar General's low-priced merchandise fits into virtually every budget.

Along the same thought process, Dollar General's sales should be positively impacted by the refund checks issued by the U.S. Treasury this summer. Consumers are likely to make those checks last and will do so by shopping at Dollar General's stores.

Finally, perhaps the most positive influence on this stock over the intermediate- and long-term is that the Federal Reserve has drastically reduced interest rates in 2001. That variable alone may be enough to consider shares of Dollar General at current levels.

DRIP Information:

Shares to Qualify = 1           Accept Foreign Accounts: Yes
Auto-reinvestment = Yes         Temper Enrollment Serv:  Yes

Min/Max Investment = $0 to $75,000/month
Reinvestment Fees: 
Dividend: 0        Cash: $1+4c/sh      Auto ReInvest: 75c+4c/sh

Transfer Agent:

Registrar & Transfer Co.


Industry Group:          Retail   52-week high=$24.05
Annual Dividend Per Share=$0.50   52-week low =$13.44
Last earnings 12/00    est=0.22   actual=0.21
Next earnings 04-17    est=0.14   versus=0.14
                                  P/E = 31
Analyst Ratings:
Strong Buy    = 1
Moderate Buy  = 8
Hold          = 3
Moderate Sell = 0
Strong Sell   = 1


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