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Why Dollar General Stock Jumped Wednesday

By Daniel Sparks – Dec 26, 2018 at 3:26PM

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The stock finished the trading day up 7.2%.

What happened

Shares of dollar-store chain Dollar General (DG 1.46%) jumped on Wednesday, rising 7.2% by the time the market closed.

The stock's gain was probably primarily fueled by a sharp rise in the overall stock market on Wednesday, as well as optimism toward retailers following a press release from (AMZN -0.59%) detailing a record-breaking holiday season.

A chart showing a stock price moving higher

Image source: Getty Images.

So what

In a post-Christmas rebound, shares surged on Wednesday, recovering some losses after a rough December. The S&P 500 jumped nearly 5%, as many stocks rose amid market optimism.

But investors may also have an improved outlook for retailers on Wednesday thanks to Amazon's report of record sales during the holiday season and record sales for Amazon's small and medium-sized businesses on its platform. Some investors may translate this press release as news that consumers are spending more money this holiday season than they were last year, signaling a good holiday season for other retailers as well.

Now what

In Dollar General's fiscal third-quarter update earlier this month, management said it expected to finish its fiscal year with positive same-store-sales growth. Looking further out, management said it expects to open 975 new stores, remodel 1,000 mature stores, and relocate 100 stores in fiscal 2019.

"We remain very excited about our future real estate growth opportunities," said Dollar general CEO Todd Vasos in the company's third-quarter earnings release. "We believe our ongoing investment in high-return real estate projects, along with our strategic initiatives, will not only continue to drive long-term shareholder value, but will also allow us to further enhance our ability to serve our communities and our customers."

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Daniel Sparks owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.

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