Dollar General's (DG) post-earnings drop on Tuesday isn't piercing the confidence of analysts charting a buying opportunity.
The shares fell by nearly 7%, providing a key opportunity for bullish analysts, especially after strong sales figures that bested estimates on Tuesday morning.
"We are maintaining DG's top pick status, and would take advantage of the weakness," Oppenheimer analyst Rupesh Parikh prescribed. "DG shares tend to be volatile on the prints, and we still feel confident in the company's ability to deliver industry-leading bottom-line growth next year within our food retailing/discounter universe."
He noted that a strong lower-income consumer should continue to spend at the store, driving continued same-store sales strength.
Parikh maintained a "Buy" rating on the stock with a price target of $120 per share.
A Morgan Stanley consumer survey backed the view on consumer strength as well, fueling the firm's bullishness on the Dollar Store consumer, which remains insulated from the "Amazon effect."
"We also remain constructive on the Dollar Store space, supported by our AlphaWise Dollar Store Survey which reinforces our view that dollar stores offer a differentiated trip and relative eCom insulation," Vincent Sinisi, executive director of equity research at Morgan Stanley said.
Sinisi's firm also doled out a "Buy" rating amid the pullback in share value.
Real Money Pro's Tim Collins bucked bearish sentiment on the company after its disappointing guidance on Tuesday morning, especially given the company's propensity to rebound after earnings day setbacks.
"There's some reason to be slightly optimistic, even bullish on a short-term trade," he explained. "With shares trading in the $104-105 range near the end of the trading day, DG makes for an intriguing counter-trend trade."
He noted that, at the risk of a smaller downside, traders could see solid gains into year-end if history serves as a guide.
To be sure, such plays are counter to the pessimistic market momentum infecting numerous industries, and the downside is certainly a risk worth acknowledging.
Such downside risk is scaring away chart-watcher and Real Money contributor James "Rev Shark" DePorre.
"This is not the time to buy Dollar General," he declared. "The cut in guidance combined with the poor chart suggest that the risk is to the downside. This is dead money in the near term."
The question for investors is whether or not the longer-term price targets of analysts and history of resilience outweigh the poor chart readings and the possibility of further share price cuts for the discounter.
Headed into a possibly choppy 2019, time horizon and risk appetite will be key to making the call or putting your pennies together elsewhere.