Goldman: Buy This Retail Stock Amid the Trade War

DG stock is higher after a bullish analyst note

by Andrea Kramer

    Published on Aug 8, 2019 at 2:42 PM

    The shares of Dollar General Corp (NYSE:DG) are higher today, after Goldman Sachs upgraded the retail stock to "buy" from "neutral," and hiked its price target to $152 from $142. Ahead of another round of U.S. duties on Chinese imports -- this time expected to hit the retail sector -- on Sept. 1, the brokerage firm said "DG is one of the least exposed companies ... to tariffs on imports from China."

    Dollar General stock is up 2.1% to trade at $137.45, set to topple its 10-day moving average for the first time since mid-July, when DG was flirting with record highs around $145. What's more, the equity is pacing for its best session since May 30. From a longer-term standpoint, DG has been in a channel of higher highs and lows for years, with recent pullbacks contained by its 120-day trendline.

    DG stock chart aug 8

    Most analysts are already on Dollar General's bullish bandwagon. The stock sports 15 "buy" or better endorsements, compared to four "hold" or worse ratings. However, additional price-target hikes could be coming down the pike. The consensus 12-month price target of $140.92 represents a slim 2.3% premium to current levels.

    Elsewhere, recent options buyers are likely cheering today's upgrade-induced pop. On the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open nearly twice as many DG calls as puts in the past two weeks. The resulting 10-day call/put volume ratio of 1.91 is in the 81st percentile of its annual range, pointing to a healthier-than-usual appetite for bullish bets over bearish of late.

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