By Mackenzie Tatananni

Dollar General stock is positioned as a dark horse in the rapidly intensifying trade war, Citi Research analysts wrote Monday, arguing that the discount retailer has "smaller problems" than its peers.

Citi Research analysts led by Paul Lejuez upgraded shares of Dollar General to Neutral from Sell with a $101 price target, up from $69. In their view, Dollar General doesn't have the same exposure to tariffs as other retail stocks in Citi's coverage and may benefit from consumers trading down as recession fears loom.

Considering the next 12 months, a Sell rating is no longer warranted as consumables-based businesses are likely to fare better than those selling more discretionary products, the analysts said. They noted that roughly around 10% of Dollar General's sales are impacted by tariffs, as most of what the chain sells is food and consumables. "In the current environment, DG's positioning as a retailer with mindshare for value should help them avoid any significant pressure from a potentially weakening consumer," the analysts wrote.

The Citi Research team believes Walmart likely will transfer higher costs to consumers, which would be a positive for Dollar General "and serve as cover for DG to also increase prices where they need to." Barron's selected Dollar General as a stock pick in January, arguing that the company's plan to "coexist" alongside Walmart would help it find success.

Shares of Dollar Tree tumbled on the heels of Trump's "Liberation Day" announcement last week. The company, arguably Dollar General's biggest competitor, relies heavily on imported goods from China. Despite this exposure, CEO Michael Creedon Jr. asserted on the latest earnings call in March that Dollar Tree would be able to mitigate the impact of additional tariffs.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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April 07, 2025 07:59 ET (11:59 GMT)

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