As Americans shop for bargains, these discounters might fare best in the stock market

By Philip van Doorn

Even though dollar stores' shares have soared this year, their three-year growth projections and current P/E valuations still make them appear to be good values for long-term investors

These are four of the 11 discount retailers screened by MarketWatch.

The stock market always looks ahead, and investors can see that even affluent Americans have been changing their shopping habits and trying harder to get better prices.

Jeffry Bartash reported on a decline in consumer confidence, despite economic growth and a low unemployment rate. The combination of stubbornly high inflation and declining wage growth underscores the stock market's recent enthusiasm for discount retailers.

Through Thursday, shares of Dollar Tree Inc. (DLTR) were up 51% for 2025, while Dollar General Corp.'s stock (DG) was up 70%, with dividends reinvested.

Dollar Tree reported excellent results for its fiscal third quarter on Wednesday. During the earnings conference call, Chief Executive Michael Creedon said the retailer had "3 million more households shop with us" during the quarter when compared with the year-earlier quarter, according to a transcript provided by LSEG.

Dollar General followed suit on Thursday with its own set of strong quarterly numbers that included a 2.5% increase in foot traffic in its stores. The company's chief executive, Todd Vasos, said during a call with analysts that "disproportionate growth" in its number of customers came from higher-income households. The stock rose 14% that day.

With the dollar stores' stocks soaring, along with those of some other retailers known for bargain pricing, such as Five Below Inc. (FIVE), TJX Cos. (TJX) and Walmart Inc. (WMT), this is an appropriate moment to consider whether or not these stocks are fully priced.

So we screened a group of 11 retailers. The group includes eight stocks of companies in the S&P Composite 1500 Index XX:SP1500 categorized by LSEG as operators of discount stores, plus three more: Five Below, Burlington Stores Inc. (BURL) and Walmart.

In summary, Five Below has shown the fastest sales growth, Target Corp.'s stock (TGT) is the cheapest based on its price relative to earnings per share, and analysts see the most upside potential in Burlington Stores shares.

Recent results

Here are the 11 retailers, with Dollar Tree and Dollar General listed first, followed by the others in alphabetical order. The data includes the most recent reported increases or declines in quarterly comparable-store sales and total revenue from the year-earlier quarters. It also includes earnings per share for the most recent reported fiscal quarters and for the year-earlier quarters.

Retailers report for fiscal quarters that typically don't match the calendar, so the most recent quarterly figures for EPS are labeled "Q0," while the year-earlier figures are labeled "Q4."

The data has been provided by LSEG, except for Dollar Tree's adjusted comparable growth and revenue figures, which were taken from the company's earnings press release because it now categorizes its Family Dollar unit as "discontinued operations."

   Company                                  Comparable- store sales change  Revenue change  EPS - Q0  EPS - Q4 End date of reported fiscal quarter 
   Dollar Tree Inc.                                                   4.2%            9.4%     $1.20     $1.09              11/1/2025 
   Dollar General Corp.                                               2.5%            4.6%     $1.28     $0.89             10/31/2025 
   BJ's Wholesale Club Holdings Inc.                                  1.1%            4.9%     $1.16     $1.18              11/1/2025 
   Burlington Stores Inc.                                             1.0%            6.9%     $1.66     $1.43              11/1/2025 
   Costco Wholesale Corp.                                             5.7%            8.1%     $5.88     $5.30              8/31/2025 
   Five Below Inc.                                                   14.3%           23.1%     $0.66     $0.03              11/1/2025 
   Ollie's Bargain Outlet Holdings Inc.                               5.0%           17.5%     $1.00     $0.80              8/2/2025 
   PriceSmart Inc.                                                    7.5%            8.6%     $1.02     $0.95              8/31/2025 
   Target Corp.                                                      -2.7%           -1.6%     $1.52     $1.86              11/1/2025 
   TJX Cos.                                                           5.0%            7.5%     $1.30     $1.15              11/1/2025 
   Walmart Inc.                                                       4.2%            5.8%     $0.77     $0.57             10/31/2025 
                                                                                                                  Sources: LSEG, Dollar Tree filing 

Five Below has been the runaway leader for comparable-store sales growth and has also led for revenue growth, followed by Ollie's Bargain Outlet.

Looking ahead

Leaving the 11 companies in the same order, here are forward price-to-earnings ratios for the stocks, along with projected compound annual growth rates for revenue and earnings per share going out three fiscal years from the current fiscal year. These projections are based on consensus estimates among analyst polled by LSEG, with one exception. Since Dollar Tree is now accounting for sales of its Family Dollar unit as discontinued operations, we are using the midpoint of Dollar Tree's own sales projection for its fiscal 2025.

For reference, projections are included at the bottom of the table for the consumer staples and consumer discretionary sectors of the S&P 500 SPX, along with those for the full index. Among this group of 11 retailers, all are in the consumer staples sector of the S&P Composite 1500, except for Burlington, Five Below, Ollie's and TJX, which are in the consumer discretionary sector.

The P/E ratios are prices divided by consensus 12-month earnings-per-share estimates. These are weighted by market capitalization for the sectors and the S&P 500.

   Company                                  Forward P/E  Projected revenue CAGR for next three years  Projected EPS CAGR for next three years 
   Dollar Tree Inc.                                17.8                                         4.0%                                    10.5% 
   Dollar General Corp.                            17.8                                         4.4%                                     9.7% 
   BJ's Wholesale Club Holdings Inc.               19.5                                         5.4%                                     8.1% 
   Burlington Stores Inc.                          23.4                                         9.4%                                    18.6% 
   Costco Wholesale Corp.                          43.1                                         7.4%                                    10.6% 
   Five Below Inc.                                 26.8                                        12.2%                                    10.4% 
   Ollie's Bargain Outlet Holdings Inc.            26.8                                        13.5%                                    15.3% 
   PriceSmart Inc.                                 21.8                                         8.2%                                    14.8% 
   Target Corp.                                    11.9                                         1.0%                                    -1.5% 
   TJX Cos.                                        29.2                                         6.1%                                    11.1% 
   Walmart Inc.                                    38.9                                         4.8%                                    10.0% 
   Consumer staples sector                         21.3                                         2.9%                                     6.7% 
   Consumer discretionary sector                   28.4                                         7.0%                                    14.1% 
   S&P 500                                         22.5                                         6.6%                                    13.2% 
                                                                                                            Sources: LSEG, Dollar Tree filing 

Dollar Tree and Dollar General have projected revenue and EPS growth rates that are much higher than those of the consumer discretionary sector, while trading at forward P/E ratios that are much lower than that of the sector.

Walmart appears to be expensively priced relative to the S&P 500, especially when considering that its projected revenue and EPS growth rates are lower than those of the S&P 500.

Costco Wholesale Corp. (COST) has the highest forward P/E of the stocks on the list. The stock is now down 2% for 2025, with dividends reinvested. The company put up its own set of impressive quarterly numbers on Wednesday, but investors might have had concerns about a slowing growth rate for comparable-store sales.

Analysts' ratings and price targets