Penny for your thoughts? How about a dollar -- Dollar General (NYSE:DG), that is. The deep discount retailer returned to the public markets with an IPO a few weeks ago that granted it a P/E multiple nearly double that of Wal-Mart Stores (NYSE:WMT). Seems a little steep, if you ask me, even if this General's still an industry leader.

A little payback
Private equity firm Kohlberg Kravitz Roberts and other investors took Dollar General out of the public eye in 2007 for $7.3 billion, and the dollar store has been turning out a respectable performance as a private company ever since. For the trailing 12-month period ending in July, sales exceeded $11 billion, representing nearly 9% average annual growth over the last two years. Profit surged to $93.6 million last quarter, from $27.7 million a year earlier, as comps rose 8.6%.

That's not surprising in this recession. Consumers have been turning in droves to the likes of discount retailers Wal-Mart, Family Dollar (NYSE:FDO), and Dollar Tree (NASDAQ:DLTR) to stretch the family paycheck. With unemployment north of 10% these days, the case for continued outperformance seems high.

Now's as good a time as any
Or does it? Since the depths of the recession in March, the market has rocketed 60% higher, and IPOs are hot once again. There were 22 this past quarter, and more than 90 are scheduled for next year. Archipelago Learning was one of the more successful IPOs these days, as was Fortinet, though a spinoff of Rio Tinto's (NYSE:RTP) western U.S. assets didn't fare as well.

The heightened interest in bringing companies public suggests their backers are looking to cash out while the potential valuations remain high, and larger company IPOs are more in favor than those of smaller companies. Dollar General's IPO is the largest for a retailer in almost two decades, and while the owners are keeping nearly 90% ownership, they're still getting a pretty penny for the piece they floated to the public.

For them, not you
At the IPO price of $22 a share, KKR got $251 million for selling its 11.4 million-share stake. And that takeaway doesn't include the $239 million special dividend that Dollar General paid its owners back in September, even though the retailer won't be paying any dividend as a public company. In total, 34.1 million shares were sold in the IPO, netting over $700 million.

It's looking more and more like the General's investors needed a payday in these troubling times. Compared to Family Dollar and Big Lots -- and even Costco (NASDAQ:COST) and Target (NYSE:TGT) -- the market has given Dollar General a rich premium, particularly when you factor in analyst annualized five-year growth prospects of some 13%. And if you include Dollar General's sizeable long-term debt -- more than $4 billion, most of which was foisted upon it following its takeover -- the company looks even more expensive.

Foolish takeaway
The tremulous news out of Dubai this holiday week suggests just how shaky investor confidence is in this purported recovery, which means deep discounters like Dollar General will continue to thrive. Yet if you want the most bang for your buck, you'd do well to wait before getting in the General's checkout line just yet. Just because KKR is trying to cash out doesn't mean you should try to cash in. In fact, it's all the more reason to believe that you shouldn't.