Sell Dollar General out of Jubak's Picks to raise cash

12/28/2012 6:10 pm EST


Jim Jubak

Founder and Editor,

I don’t think this is a market with any patience for patience. And anyone who is waiting for fundamentals to prove pessimistic sentiment wrong on a specific stock is likely to have a long wait.

If you’re looking to sell something to raise cash in case we get a buying opportunity on a fiscal cliff disappointment, selling a stock that has turned into a short-term disappointment is a reasonable move. If this market does bounce, stocks like these won’t lead the way upwards and in an unsettled market like this working through a short-term disappointment can turn into a six-month project.

Which is why I’m selling Dollar General (DG) out of Jubak’s Picks  today. On December 10 Dollar General (DG) reported earnings of 63 cents a share, 3 cents a share above the Wall Street consensus, but the stock get killed the next day on reduced guidance for the fourth quarter and worries about tighter margins. In the current market I can talk as long as I want about the 7.8% drop on the news being excessive or how tough comparisons with the very strong quarter in 2011 distort short-term results or the likelihood that tighter margins are temporary and cite the company’s plans for cutting costs and I think I’d be wasting my breath. The fiscal cliff talk has taken a bite out of consumer confidence as Wall Street has expected and with the early holiday shopping numbers looking disappointing, suddenly everybody is worried about retail. I think this might be a great sector to own half way through 2013 and in that time frame I like this stock with its appeal to consumers trying to save a buck in a stumbling economy. But right now? I think this is a good source of cash.

I’m selling the stock with a 10.1% loss since I added it to the portfolio on November 26.

Full disclosure: I don’t own shares of any of the companies mentioned in this post in my personal portfolio. The mutual fund I manage, Jubak Global Equity Fund, may or may not now own positions in any stock mentioned in this post. The fund did not own shares of Dollar General as of the end of September. For a full list of the stocks in the fund as of the end of September see the fund’s portfolio at

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