Dollar General Outperforms Market in Trump’s First 100 Days, Analysts Cite Defensive Stock Appeal

Dollar General has been one of the standout stock performers in the early months of President Donald Trump’s second term, with shares surging more than 36% since his inauguration on January 20, 2025. This performance ranks the discount retailer as one of the top three S&P 500 stocks in percentage growth, trailing only software company Palantir and tobacco giant Philip Morris International.

Dollar General’s stock growth has vastly outpaced the broader consumer staples sector, which has seen a 6% increase over the same period. Additionally, the company has outperformed its major competitors, including Dollar Tree and Walmart, highlighting its resilience in a turbulent market.

Market Rotation to Defensive Stocks

The surge in Dollar General’s stock price is largely attributed to a broader market rotation towards defensive stocks, as investors seek stability amid economic uncertainty. "Historically, the dollar stores have done better in softer macro environments, especially if we were heading into a recession," said Arun Sundaram, senior vice president at CFRA Research.

Amid concerns over inflation and trade tariffs under the Trump administration, the stock market experienced volatility, particularly in early April when Trump announced reciprocal tariffs on numerous trade partners. However, Dollar General’s stock remained relatively stable, up 5% in April, while the S&P 500 fell more than 2%.

Lower Exposure to Tariffs

Analysts also credit Dollar General’s stock performance to its relatively low exposure to tariffs compared to other retailers. Only 4% of its purchases are imported, making it less vulnerable to the impact of tariffs, particularly on Chinese imports. This stands in contrast to other retailers, where tariffs on products like seasonal goods and home items have been more pronounced.

The company’s product mix, which heavily favors consumables like food (accounting for 82.2% of sales), is less susceptible to tariff hikes than discretionary products. As a result, Dollar General has been able to navigate the ongoing tariff situation with fewer disruptions to its business operations.

Recovery from Last Year’s Setback

Despite its recent success, Dollar General is still recovering from a sharp decline in August 2024, when the company issued a disappointing earnings report and slashed its full-year guidance. Shares have yet to fully recover from the 36% drop from their 52-week high, set in May 2024, and are still nearly 65% below the all-time peak reached in October 2022.

However, the company has been making strides in its recovery, with CEO Todd Vasos leading a turnaround strategy that focuses on improving productivity and maximizing the potential of existing stores. Analysts have noted that this back-to-basics approach has contributed to Dollar General’s recent positive momentum.

Competitive Landscape and Risks Ahead

Despite the favorable stock performance, Dollar General faces intense competition from retail giants like Walmart, Amazon, and Costco, which have more robust online presences and growing e-commerce businesses. "Walmart is the big, 800-pound gorilla that Dollar General is up against," said Bradley Thomas, equity research analyst at KeyBanc Capital Markets.

The rise of Walmart and the increasing prominence of online shopping pose risks to dollar stores, particularly as more consumers shift to delivery-based shopping. Additionally, the broader macroeconomic environment, including potential inflation from tariffs and changes to government programs like the Supplemental Nutrition Assistance Program (SNAP), could put additional pressure on Dollar General’s core lower-income customer base.

Despite these challenges, the company has found some relief in attracting more middle-income shoppers who are "trading down" in a tough economic environment. However, analysts caution that while demand remains strong, Dollar General's ability to fully meet this demand could be constrained by ongoing challenges.