Dollar General Corp. (DG), Dollar Tree, Inc. (DLTR): Why Dollar Stores Will Always Be a Hit

The company reported a 1.1% increase in income in its most recent quarter, totaling $3.8 billion. Revenue hit $114.2 billion for the quarter, falling short of expectations of $116.3 billion.

To provide added convenience, Wal-Mart has begun focusing its efforts on opening neighborhood markets across the U.S. These markets are sized like the same small-town grocery stores that have gone out of business as consumers made the switch to shopping at superstores. The company plans to open 500 stores by the end of 2016, entering many markets where dollar stores and small grocery stores are currently the only options.

A promising future

While dollar stores will likely always be popular with budget-conscious buyers, with Wal-Mart opening more of its neighborhood markets, the smaller discount retailers may find it harder to attract shoppers. Analysts have high hopes for the company, expecting Wal-Mart to grow an average of 9.3% each year for the next five years.

Expectations are higher for Dollar General, however, with analysts expecting  average growth of 15.4% each year over the next five years.

Dollar Tree, Inc. (NASDAQ:DLTR), meanwhile, has an average rating of “outperform” on Wall Street, showing that it’s popular not only with consumers but investors, as well. Still, there’s no denying the staying power of Wal-Mart, which tends to be a go-to store for consumers of all economic backgrounds regardless of the economy, making it the choice stock of the group. 

Stephanie Faris has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article Why Dollar Stores Will Always Be a Hit originally appeared on Fool.com and is written by Stephanie Faris.

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