Dollar Tree vs. Dollar General Stock: Which Is a Better Investment?
Written by
Yaël Bizouati-Kennedy
Edited by
Maria Concepcion
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Dollar stores may be your first thought when it comes to saving money on everyday household items or groceries, but should you be looking into the buy ratings of favorite discount retailers such as Dollar Tree or Dollar General when it comes to investing? According to Peter C. Earle, senior economist at the American Institute for Economic Research, investors comparing these two firms can look at a handful of differentiating features.
“Comparing the gross profit margins of each gives an idea of how efficiently the two translate revenues into profits, and higher margins equate to better management of costs and possibly more pricing power in the market,” he said. “Both of those, over time, mean higher earnings, which in turn tends to mean higher stock prices.”
In addition, Earle noted that for retail firms such as these, those with a higher store count and a broader geographic presence are likely to have better prospects for medium- to long-term growth — in addition to being diversified against regional/state issues.
“A very general rule of thumb is to compare store sales growth, which is to say the revenue increase for stores that have been open for one year or longer,” he added, noting that comparing store sales growth between two firms can reveal whether one is generating growth by organic measures as opposed to simply opening as many new locations as possible.
In turn, which stock is a better investment?
Quick Take: Is Dollar Tree Stock (DLTR) a Buy?
- Stock price: $73.71
- Market cap: $15.85 billion
- 52-week high: $127.99
- 52-week low: $60.49
Dollar Tree stock has received a consensus rating of “buy” by many expert investors. If you are considering investing, you should consider that Dollar Tree is selling Family Dollar for drastically less than it paid to buy it which could affect its performance as the frequency of Family Dollar store closures could increase once the chain is sold to its private equity investors. This means that Dollar General could reap the rewards of any upheaval caused by this sale by its rival retailer.
Quick Take: Is Dollar General Stock (DG) a Buy?
- Stock price: $90.31
- Market cap: $19.86 billion
- 52-week high: $150.40
- 52-week low: $66.43
As another one of the biggest names in the discount retail game, 2025 is looking promising as discounted everyday items could be the best way to save for consumers looking to save money on tariffed goods as more expensive foreign imports could play to Dollar General’s strengths.
With that in mind, Dollar General will need to improve profitability during this economic volatility. Its management seems to currently be focused on getting back to basics with a strategy to improve inventory efficiency and reduce costs overall for both consumers and investors.
Final Take To GO: Where Should You Put Your Dollar?
While both discount retailers know their way around saving a dollar, Dollar General stock tends to perform more consistently in areas such as financials or dividend payout, making it more approachable for those looking for a more stable or safe investment. It maintains a primary focus on discounted essentials and expanding its geographic presence in varying regions to help bolster its worth and protect itself from economic fluctuations.
However, despite its selling of Family Dollar, Dollar Tree’s potential for future growth and capital allocation strategies may make it attractive to investors who are looking for higher growth potential, or perhaps those with a bit higher risk tolerance. So, whether Dollar Tree stock or Dollar General stock is a better investment option for you depends on both your short-term or long-term financial goals.
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