12 Undervalued Defensive Stocks for 2025

3. Dollar General Corporation (NYSE:DG)

Forward P/E: 11.92

Number of Hedge Fund Holders: 45

Dollar General (NYSE:DG) operates merchandise stores. Its various merchandise offerings include home products, consumables, seasonal items, apparel, and more. Its merchandise collection includes its own private brands and brands from manufacturers. Dollar General (NYSE:DG) is the biggest retailer in the US, with more than 20,000 stores nationwide.

Even though the company’s business has experienced pressure, its net sales grew by 5% to $10.2 billion in fiscal Q3 2024. The company grew its market share in dollars and units in highly consumable and non-consumable products sales during the quarter. Dollar General’s (NYSE:DG) same-store sales also rose by 1.3%, and this growth was attributed to 1.1% growth in the average transaction amount, including the average unit retail price per item and the increase in average items per basket. The company is focusing on its “Back to Basics” strategy to boost growth, which entails improved inventory management, reduced theft and shrink, enhanced in-stock levels, and a better customer and checkout experience.

The company is also focusing on maintaining a mix and balance in its inventory to boost sales and improve stock levels. Through fiscal Q3 2024, the business generated cash flows of $2.2 billion from operations, an increase of 52% due to improvements in Dollar General’s (NYSE:DG) working capital position, mainly through inventory management. It ranks third on our list of the 12 undervalued defensive stocks for 2025.