Investors looking for bargains often turn to the consumer sector, which includes plenty of stocks that offer growth potential and a viable path to long-term gains. The sector also tends to have stocks trading at more manageable prices, allowing for full shares to be purchased on investing budgets as minimal as $500.

Many of these stocks represent companies that cater to niche consumer segments, so investors who don't shop in those niches may not be aware of them. Additionally, these companies can sometimes hit a rough patch that discounts their valuations well below normal. Such conditions could make stocks like Tractor Supply (TSCO -0.96%) and Dollar General (DG 1.02%) excellent choices for small investors. Let's explore why these two absurdly cheap stocks are worth consideration at the moment.

1. Tractor Supply

Tractor Supply is a rural lifestyle retailer. Since its start in 1938, its nearly 2,200 locations in rural and suburban areas have served hobby farmers engaging in agriculture on a small scale.

Despite its stock rising around 50,060% since its 1994 IPO, this company still has room to grow. It has bought out competitors such as Orscheln Farm and Home to rebrand them as Tractor Supply locations. It also operates 195 Petsense stores, which offer products and services to pet owners.

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Moreover, the work-from-home trend and the pandemic prompted an increase in the rural population, increasing its addressable market.

Unfortunately for the company, the stock has fallen this year amid declining sales. The company initially blamed the economy, but sales trends have continued to worsen.

Revenue of almost $11 billion in the first nine months of 2023 rose 7% versus the same period in 2022. Over the same time frame, net income of $859 million grew by only 5%, as a lower cost of goods sold did not compensate for rising interest and operating expenses.

Nonetheless, the dividend remains a bright spot within the company. At $4.12 per share annually, it offers a dividend yield of 2%, more than the S&P 500 average of 1.6%. Also, the payout has increased every year since its inception in 2010. And since it rose 12% this year and 77% last year, the company is signaling a strong belief in its long-term trajectory.

Finally, the declines have taken the P/E ratio below 20, just above its lowest level since the beginning of the pandemic. Admittedly, at a price of $200 per share, investors may have to start slow. However, the growing addressable market should keep longer-term growth in a positive direction.

2. Dollar General

The last 12 months were brutal for ultra-discounter Dollar General. In 2022, the company made the mistake of purchasing too much inventory, forcing it to unload merchandise at discounted prices.

So far, results are not encouraging. Same-store sales decreased 0.1% in the second quarter of fiscal 2023 (ended Aug. 4). In contrast, archrival Dollar Tree saw its same-store sales rise 7%, a strong indication Dollar General's problems are primarily within the company.

Such conditions pointed to a disconnect at the top of the company, prompting Dollar General to appoint a new CEO (who is the old CEO). Todd Vasos, who took the company through a growth spurt between 2015 and 2022, returned to the job, likely to get Dollar General back on track.

The company could get help from an unexpected area -- the economy. Dollar General tends to cater to rural, lower-income customers. Also, while inflation has cooled in recent months, it is well above the Fed's 2% target. Hence, the need for lower-cost items could drive customers to the discount retailer.

For the first two quarters of fiscal 2023, net sales of $19 billion rose 5% compared with the same time frame in fiscal 2022. Unfortunately, rising inventories forced Dollar General to discount more merchandise, meaning gross margins for the six-month period fell to 31.4%, below the 31.8% gross margins in the same period 12 months ago.

Also, operating expenses rose faster than revenue. That led to a net income of $983 million. This was a 20% drop compared with year-ago levels.

The share price of $120 per share will limit an investor with a $500 budget. But despite the results, investors may have an opportunity with the P/E ratio at 12. This earnings multiple is coming off its lowest levels on record and well under Dollar Tree's 21 P/E ratio. If management can get the company back on track, such an earnings multiple could make this retail stock a compelling buy.