We recently published a list of Top 8 Discount Stores Stocks For 2025. In this article, we are going to take a look at where Dollar General Corporation (NYSE:DG) stands against other top discount stores stocks for 2025.
When Donald Trump announced tariffs on China, Canada, and Mexico, stocks of most of the retail stores went down. The tariffs are likely to increase inflation and hurt the country’s economy if they continue for the duration of Trump’s term.
For investors, it is vital to keep an eye on companies that are either taking a hit on revenue directly through tariffs or losing popularity among consumers in the foreign countries involved. Some companies can take a financial hit better than others. Take for instance a company that makes branded clothing. Such a company can raise the prices of its products and its loyal consumers won’t mind. Now imagine a retail store that sells the same product. When consumers see a 10% rise in the price of the product, they blame the store, not the brand. It is the retail store that loses value in this case and that’s why the tariffs hurt them, even if they aren’t directly exposed to China.
We decided to take a look at 8 discount stores as investments in 2025. To come up with our list of 8 discount stores as investments in 2025, we only considered stocks with a market cap of at least $2 billion.
A busy shopping aisle filled with discounted items in a retail store.
Dollar General Corporation (NYSE:DG)
Dollar General Corporation (NYSE:DG) is a discount retailer that offers multiple merchandise products. The company provides cleaning products, laundry products, consumable products, and other products. The company’s stock has lost over 71% of its value in just 2 years. While this is disappointing for existing shareholders, there is an opportunity here for new investors. It is unlikely that people will stop shopping for cheaper products anytime soon. So DG’s turnaround simply depends on the management pulling off a turnaround.
Inflation in the last couple of years has reduced the disposable income of low-income families, a demographic that loves to shop at DG stores. The stock is trading at just over 11 times earnings which sounds like a really good bet. To determine if that makes it a good investment or a value trap, let’s take a look at what the management is planning.
The first thing the management has done is to stop buybacks. Clearly, the management is prioritizing efficient usage of cash and long-term benefits over short-term stock appreciation. There is a clear strategy for reducing shrinkage (inventory lost to theft, errors, etc.). There is a self-checkout limit of 5 items per self-checkout while in some locations the facility has been removed completely. Other initiatives include expanding private label selections, improving store layouts, and completely remodeling older locations.
Initiatives like the above are already showing results, but it is more about the management’s intention than results at this stage. If you’re willing to back the leadership team here, the rewards could be sweet down the road.
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Disclosure: None. This article is originally published at Insider Monkey.
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