We recently published a list of Top 8 Discount Stores Stocks For 2025. In this article, we are going to take a look at where Dollar Tree, Inc. (NASDAQ:DLTR) stands against other top discount stores stocks for 2025.
When Donald Trump announced tariffs on China, Canada, and Mexico, stocks of most of the retail stores went down. The tariffs are likely to increase inflation and hurt the country’s economy if they continue for the duration of Trump’s term.
For investors, it is vital to keep an eye on companies that are either taking a hit on revenue directly through tariffs or losing popularity among consumers in the foreign countries involved. Some companies can take a financial hit better than others. Take for instance a company that makes branded clothing. Such a company can raise the prices of its products and its loyal consumers won’t mind. Now imagine a retail store that sells the same product. When consumers see a 10% rise in the price of the product, they blame the store, not the brand. It is the retail store that loses value in this case and that’s why the tariffs hurt them, even if they aren’t directly exposed to China.
We decided to take a look at 8 discount stores as investments in 2025. To come up with our list of 8 discount stores as investments in 2025, we only considered stocks with a market cap of at least $2 billion.
A shopper browsing through a discount retailers merchandise aisle filled with a wide variety of items.
Dollar Tree, Inc. (NASDAQ:DLTR)
Dollar Tree, Inc. (NASDAQ:DLTR) operates a chain of discount retail stores and offers a wide range of products including household, personal care, food, health, and other general merchandise. The company has two main business units; Family Dollar and Dollar Tree. It has a unique business model where merchandise is priced at a fixed rate of $1.25 in its dollar tree segment. A 45% decline in share price within a year suggests low-income households, the company’s primary target market, aren’t doing well with disposable income.
Dollar Tree (NASDAQ:DLTR) continues to be dragged down by the struggling Family Dollar business. The acquisition that was signed just over 10 years ago is now a big headache for DLTR. At that time, Family Dollar was a much bigger network than Dollar Tree’s own stores. We now see that the company was unable to handle this increasing demand from a management perspective. To make matters worse, further expansion ended up hurting the existing stores.
The company will have to learn how to survive in the tough macroeconomic environment rather than relying on government programs for low-income households or improving macro. Unlike Dollar General (DG), which is also facing similar struggles, DLTR’s management doesn’t inspire a lot of confidence among investors. There’s a certain risk associated with this investment, and the reward isn’t very attractive.
Overall, DLTR ranks 5th on our list of top discount stores stocks for 2025. While we acknowledge the potential of DLTR as a leading AI investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is as promising as DLTR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
