Dollar General’s share prices have risen by over 25% in 2025, outperforming the S&P 500 Index, which has declined by approximately 8% during the same period. This represents a significant outperformance of more than 30 percentage points for the retailer. The disparity in performance can be attributed to a variety of factors that investors might consider when evaluating Dollar General’s stock.
Dollar General operates within the dollar store retail sector, focusing on providing products at low price points. This strategy is part of its value proposition, with more than 80% of its sales stemming from consumer staples, complemented by clothing and seasonal items. The store aims to serve as a local convenience option, offering a better selection compared to small convenience stores. Its primary market includes regions underserved by larger retailers, with an average store surrounding population of about 20,000 people. This setup provides convenience and competitive pricing, as customers may prefer Dollar General’s proximity over traveling to big box stores for larger pack sizes.
With over 20,000 locations, Dollar General benefits from economies of scale, helping to sustain its profit margins. Though its financial performance has recently been slightly weak, the company plans to expand its store network by 2% in 2025, indicating potential growth opportunities despite its large size.
Dollar General’s business model tends to be resilient during economic downturns. While not immune to recessions, it generally performs better than many other retailers under such conditions. This resilience contributes to its stock’s strong performance amid market weakness and recession fears driven by economic and geopolitical factors.
The company contends with rising costs that impact earnings and growth efforts. To manage expenses, Dollar General took a charge in the fourth quarter to phase out an underperforming new store concept. Despite its 2025 gains, the stock has lost over half its value since peaking in 2022, suggesting this year’s rally may be a rebound from previous declines.
Another factor influencing Dollar General’s prospects is the situation with Family Dollar, its main competitor owned by Dollar Tree. Dollar Tree has agreed to sell the underperforming Family Dollar to private equity firms at a considerable loss and has been closing stores. This development could reduce competition and open up further growth opportunities for Dollar General in the near term.
Given its depressed stock price, Dollar General may have further upward potential. Even without significant business improvements, especially during a recession, modest financial enhancements might impress investors, given the current competitive landscape adjustments. This suggests that Dollar General could be an attractive option for investors concerned about the economy and those with long-term investment goals.
