Although the Nasdaq Composite is up nearly 13% in 2023, it is still down almost 27% from its peak that was set in Nov. 2021. And this still places it in bear market territory as it tries to claw back some of those losses. 

What has pressured stock prices? Undoubtedly, fears about a possible recession -- driven by stubbornly high inflation and rapidly rising interest rates -- deserve the blame. It would probably be a wise decision for investors to find ways to protect their hard-earned savings in this type of uncertain environment. 

With that mental framework in mind, Dollar General (DG -0.41%) deserves a closer look because it is a stock that can help recession-proof your portfolio. Here's why. 

A durable business model 

With trailing-12-month revenue of $36.3 billion and its massive physical footprint of 18,818 stores in 47 states across the country, Dollar General is a leading discount retailer in the U.S. Stores offer up merchandise that lends itself to repeat purchases, including food, beauty products, cleaning supplies, and seasonal items. Dollar General also sells popular products from well-known brands. 

One of the key competitive strengths of Dollar General is its location advantage. Many stores are in rural, low-income areas, where it might be the only shopping destination in town. The company benefits from having lower overhead costs as well as customer loyalty. 

As softer macro conditions negatively impact businesses across the economy, Dollar General's value proposition shines bright. When smaller rival, Dollar Tree, announced price increases in late 2021 on most of its products in response to inflationary pressures, Dollar General stayed put. And even though Dollar General only sells roughly 20% of its merchandise at $1 or less, this move (or lack thereof) no doubt helped to attract budget-conscious consumers. 

Management recently released some preliminary numbers for the latest fiscal period (fourth quarter of 2022, ended Feb. 3). They said the company posted same-store sales growth in the quarter of 5.7%, below prior guidance of 6% to 7%. What's more, the leadership team expects diluted earnings per share (EPS) between $2.91 and $2.96, below the prior target of $3.15 to $3.30.

Full-year 2023 same-store sales guidance was lower than what Wall Street had hoped. Winter Storm Elliott hurt the business in the latest quarter, particularly in the month of December. 

However, Dollar General's ability to still produce top- and bottom-line gains is impressive in this type of environment. And it points to the company's durability and resilience. For example, during the Great Recession more than a decade ago, Dollar General generated annual revenue growth of 10.1% and 12.8% in fiscal 2008 and 2009, respectively, a clear sign of its recession-proof nature.  

A winning investment 

Over the past five years, Dollar General's stock has climbed 135%, an impressive rise that easily beats the S&P 500's return of 62% during the same time. Revenue increased from $23.5 billion in fiscal 2027 to $36.3 billion in the trailing-12-month period. And diluted EPS soared from $5.63 in fiscal 2017 to an expected $10.66 in fiscal 2022. This strong fundamental performance is further boosted by an expanding store footprint. In fact, Dollar General plans to open 1,050 new stores in fiscal 2023. 

As of this writing, shares trade at a price-to-earnings (P/E) ratio of 21, which is slightly above the 10-year historical average valuation, but in line with the trailing five-year average P/E ratio. Based on the company's recession-proof characteristics, investors might be inclined to pay a small premium for Dollar General right now, given the uncertain macroeconomic environment. 

According to Wall Street consensus analyst estimates, Dollar General is expected to increase sales at a compound annual rate of 6.9% between fiscal 2023 and 2027, with EPS rising at an annualized pace of 12.5% during the same period. These are steady and dependable gains that investors can count on as the thesis for this business is that it will continue doing what it has been doing throughout its long and successful history. 

That makes Dollar General a winning investment to put your money behind now.