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Dollar General is getting a fresh Buy rating from Gordon Haskett just as short sellers step up their bets against it. The convergence of analyst optimism and rising short positioning makes this a stock worth watching closely into the December earnings date.
Gordon Haskett's Chuck Grom upgraded DG to Buy from Hold this morning, setting a $140 price target. The stock trades at $119.32, down 10.4% over the past month. That dislocation, stock near a recent trough while a growing number of analysts turn constructive, is the central tension here.
Grom's move extends a run of upgrades. HSBC's Daniela Bretthauer moved to Buy from Hold on 24 September, raising her target from $125 to $160. Barclays raised its Overweight target to $151 at the start of September. Argus Research lifted its Buy target to $170 from $165. The consensus price target sits at $140.93, implying roughly 18% upside from current levels. The analyst recommendation differential factor score ranks at the 93rd percentile.
The bull case centres on revenue momentum, with fiscal 2024 revenue up 5.9% year-on-year to $10.91 billion, plus expansion of DG's delivery service and its Value Valley format. The bear case rests on margin pressure from lower-income consumers squeezed by fuel costs, and the risk of oversaturation as competitors expand.
Short interest rose 14% in a single session on 5 October to reach 2.97% of free float. That weekly gain of 12.6% is notable in pace, though the absolute level remains low by any measure. At under 3% of free float, short positioning is not a crowded trade.
The borrow market confirms this. Availability stands at 2,861%, meaning roughly 28 shares remain available to lend for every one currently borrowed. Even after a 65% tightening week-on-week, there is no shortage of supply for would-be short sellers. Cost to borrow is 0.45%, up 35% over the past week but still near historic lows. The 52-week peak availability was 9,541%, so the current reading, while sharply lower, reflects a change in positioning rather than any structural squeeze.
The ORTEX short score ticked up to 34.4 from around 32.4 a week ago, a modest move that tracks the short-interest increase without signalling anything extreme.
The put/call ratio sits at 1.07, below its 20-day mean of 1.17 and well off the 52-week high of 1.63. Six weeks ago, the PCR was running above 1.26. The drift lower suggests options traders have been paring hedges or bearish bets as the stock has pulled back. The z-score of -0.92 places current PCR roughly one standard deviation below its recent average, a mild tilt toward calls relative to the recent norm.
Next earnings are scheduled for 3 December. With the stock down 10% over the past month, the question for investors is whether the analyst upgrade cluster is early recognition of a turn, or whether the fresh short interest represents conviction that the bear case has not been fully priced.
Data summary
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