Dollar General New York Stock Exchange: DG And GitLab NASDAQ: GTLB operate in different industries but offer the same value, trading near long-term lows. Both have the potential to turn around and trend higher in 2025, but only one is a good buy for investors today. The other is facing multiple headwinds that will take several blocks, if not more, to soften. Here’s a look at one stock to buy and one to sell before the end of the year.
Dollar General: Deeper discounts are coming
Dollar General today
Dollar General
(As of 12/4/2024 ET)
- 52 week range
- $72.12
▼
$168.07
- Dividend yield
- 2.96%
- P/E ratio
- 12.36
- Target price
- $103.32
Dollar General and other ultra-low-price brands appear to be ideally positioned in an inflationary world, but are struggling to drive growth. Not only do stores suffer from company-specific problems, but disorganization, clutter, and staffing issues also play a role. If you go there, all the clutter makes it hard to know what’s for sale, and no one wants to buy randomly thrown items.
The takeaway for investors is that Dollar General will grow its business in 2024, but won’t be able to keep up with retail industry leaders like Walmart and TJX Companies, which are gaining share. In 2024, consumers will be looking for value and quality to improve across most of Dollar General’s product categories, not to mention the convenience that Walmart is happy to provide. Highlights of Dollar General’s first half included falling short of consensus targets and industry benchmarks and lowering forecasts.
With interest rates falling, business conditions may improve, but it will be several quarters before the full effect of the 75 bps cut is realized. will have an impact on the economy. At best, the company will gain traction by managing its workforce and inventory, which is unlikely given the persistent shortages. Labor force data has declined since its peak but shows healthy labor market conditions and enough jobs to keep talented people in better places.
Analysts are unanimous in their hope for a quick recovery in Dollar General shares and recommend holding the stock. MarketBeat’s reported consensus price target suggests a 30% upside for the market, but it is trending lower and will reach new lows in early December 2024. The lower range is around $70, which is in line with the recent bottom but solid support. remains to be seen. The critical target is near $68.50 and can be reached in the near future.
GitLab Inc., leader of the second wave of artificial intelligence
GitLab today
(As of 12/4/2024 ET)
- 52 week range
- $40.72
▼
$78.53
- Target price
- $67.58
GitLab’s share price has seen the rise and fall of AI because it is well positioned, but not for the first wave. The first wave is building infrastructure and training models, which helps GitLab today, but less so than others because GitLab is not an infrastructure company. This is a DevSecOps platform, and, according to a respected LLM developer, GitLab is indispensable. GitLab’s AI-enhanced tools connect, protect, and empower developers around the world, enabling real-time collaborative software development. This is important because the second wave of AI is a wave of AI applications, and many of them will be developed using GitLab tools.
The results for 2024 are good. The company maintains growth within 30%, beats consensus estimates and is profitable. The growth is driven by an increase in the number of clients, an increase in the number of large clients and deepening service penetration. The company reports customer growth of nearly 10% year-over-year, 33% for its largest customer group, and a net retention rate of 126%. The forecast for the next financial year calls for revenue growth of around 20% and another significant improvement in profitability. Earnings are expected to grow 40%, and both estimates are likely on the conservative side.
Analyst trends are very bullish for the GitLab market. MarketBeat reports increased coverage, improved sentiment and higher stock price targets, which combine to form a strong tailwind. Coverage increased by 65% to 25 analysts; they have lifted the sentiment to “buy” from “hold” over the past 12 months, and the price target suggests a multi-year high will be set soon. The early December consensus is just above $67, below the upper end of the trading range, but the revision trend is bullish and heading towards the upper level. The maximum range is $80, which is good for a three-year maximum. The technical forecast suggests the stock could continue to rise another $50 in this scenario.
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