Dollar stores carry a range of cheap household products and random merchandise that fit even the tightest family budgets. While inflation has pressured the “everything costs $1 or less” niche, the concept of everyday staples at bargain prices endures nonetheless.
Let's explore the three big dollar store stocks so you can decide if one may fit nicely within your investment portfolio.
| Name and ticker | Market cap | Dividend yield | Industry |
|---|---|---|---|
| Dollar General (NYSE:DG) | $22.8 billion | 2.28% | Food and Staples Retailing |
| Name and ticker | Market cap | Dividend yield | Industry |
|---|---|---|---|
| Dollar Tree (NASDAQ:DLTR) | $20.5 billion | 0.00% | Food and Staples Retailing |
| Name and ticker | Market cap | Dividend yield | Industry |
|---|---|---|---|
| Five Below (NASDAQ:FIVE) | $8.4 billion | 0.00% | Specialty Retail |
1. Dollar General
NYSE: DG
Key Data Points
2. Dollar Tree
NASDAQ: DLTR
Key Data Points
3. Five Below
NASDAQ: FIVE
Key Data Points
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What to consider when investing in dollar store stocks
A lot of dollar store goods may be disposable and inexpensive, but that doesn't mean your investment should be the same. When investing in dollar store stocks, here are five things to think about:
Financial health. Look at variables like gross profit margins, operating margins, and net profit margins to see how efficiently the company is using its revenue. Make sure it's not overly leveraged with debt. Review any plans for share buybacks and dividends.
Competitive landscape. Not all dollar stores are created equal in the same areas. See if stores are concentrated in any one particular state or region, and compare it to potential competitors.
Economic factors. Dollar stores generally perform best during economic downturns. They can make money in good times, of course, but a buy-and-hold investor shouldn't assume that high profits posted during a recession will continue through good times.
Company factors. Is the company expanding, or is it closing stores, and why? Another key retail metric to consider is same-store sales. Review the company's annual report and keep tabs on top officers to make sure there's not excessive turnover in the C-suite.
Investment strategy. Make sure your investment aligns with your own personal goals and risk tolerance. As always, make sure you're buying a stock that will help you build wealth over the long term.
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