Timothy McGuire, a director at Dollar General (DG), recently bought 3,550 shares. The buy increased his holdings by 47 percent, and came to a total cost just over $717,000.
This marks the first insider buy at the retail chain in over two years. Company insiders have been sellers of shares otherwise, nearly entirely after the exercise of stock options. That includes the company CEO and CFO, among others.
Overall, Dollar General insiders own about 0.5 percent of shares.
The retailer is down about 10 percent in the past year, slightly outperforming the overall stock market. Earnings rose by 10 percent, and revenues increased by 18 percent.
Many retailers have been under pressure due to higher costs, as shown in this mismatch, but Dollar General’s focus on low-priced items could pay off in a slowing economy and a rising price environment.
Action to take: Shares are reasonably valued at about 18 times forward earnings. Those earnings could increase if the company sees a gain in market share. In the meantime, the company yields about 1.2 percent, and has a history of dividend growth over time.
For traders, shares have been trending down the past few months, but have turned higher in recent sessions. The June $230 calls, last going or about $2.80, look like a reasonable way to play the current move higher playing out in the weeks ahead. Look for mid-double-digit gains.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.