By Mackenzie Tatananni
Dollar General stock is positioned as a dark horse in the rapidly intensifying trade war, Citi Research analysts wrote Monday, arguing that the discount retailer has "smaller problems" than its peers.
Citi Research analysts led by Paul Lejuez upgraded shares of Dollar General to Neutral from Sell with a $101 price target, up from $69. In their view, Dollar General doesn't have the same exposure to tariffs as other retail stocks in Citi's coverage and may benefit from consumers trading down as recession fears loom.
Considering the next 12 months, a Sell rating is no longer warranted as consumables-based businesses are likely to fare better than those selling more discretionary products, the analysts said. They noted that roughly around 10% of Dollar General's sales are impacted by tariffs, as most of what the chain sells is food and consumables. "In the current environment, DG's positioning as a retailer with mindshare for value should help them avoid any significant pressure from a potentially weakening consumer," the analysts wrote.
The Citi Research team believes Walmart likely will transfer higher costs to consumers, which would be a positive for Dollar General "and serve as cover for DG to also increase prices where they need to." Barron's selected Dollar General as a stock pick in January, arguing that the company's plan to "coexist" alongside Walmart would help it find success.
Shares of Dollar Tree tumbled on the heels of Trump's "Liberation Day" announcement last week. The company, arguably Dollar General's biggest competitor, relies heavily on imported goods from China. Despite this exposure, CEO Michael Creedon Jr. asserted on the latest earnings call in March that Dollar Tree would be able to mitigate the impact of additional tariffs.
Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
April 07, 2025 07:59 ET (11:59 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.