Two of the hottest stocks of 2025 aren’t what you think.
They have nothing to do with Meta (META), Nvidia (NVDA), Google (GOOGL, GOOG), Amazon (AMZN), Netflix (NFLX), Apple (AAPL), Microsoft (MSFT), or Tesla (TSLA). They also have nothing to do with bitcoin (BTC-USD), AI, or humanoid robots.
But they have everything to do with the real state of the US economy.
The two names: Dollar Tree (DLTR) and Dollar General (DG), whose stock prices have gained 55% and 65% year to date, respectively. Nvidia’s stock is up 35% on the year.
What each of these two retailers — which operate thousands of stores across the country and serve as vital consumption points for households — said on their earnings days blew me away this week.
Dollar General’s third quarter same-store sales rose 2.5%. Dollar Tree’s same-store sales gained 4.2%. For perspective, Target’s same-store sales fell 3.8% in the most recent quarter.
Dollar Tree said it captured 3 million new shoppers on top of a customer base that already totaled 100 million.
“Approximately 60% of these incremental shoppers came from higher-income households, those earning over $100,000, 30% from middle-income households, those earning between $60,000 to $100,000, with the rest from lower-income households, those earning under $60,000,” Dollar Tree CEO Michael Creedon said of the gain.
“At the same time higher-income households are trading into Dollar Tree, lower-income households are depending on us more than ever,” he said. “For example, the average spend for lower-income households grew more than twice as fast in the third quarter as the average spend for higher-income households.”
If this doesn’t smack of an affordability crisis in the US, then maybe I need to retire from this gig and find another career. Maybe apply for a job in the finance department at Dollar Tree — assuming AI agents haven’t taken that job yet.
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The dark mood on the economy was echoed by Creedon’s counterpart at Dollar General, Todd Vasos, who said Dollar General also saw an uptick in customer traffic.
“Within the basket, an increase in average unit retail price per item was offset by fewer items on average,” Vasos said. “This traffic and basket composition is consistent with what we have historically observed when our core customer feels more pressured on their spending as they come in more often, but have smaller basket sizes.”
I know what you are probably wondering: “Should I buy these stocks?” As much as I’d like to dip back into my analyst training and serve up a recommendation, I can no longer do that. What I will say is this:
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These trends that both retailers are discussing won’t unwind overnight.
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As long as inflation remains elevated for rent, healthcare, and food, these companies will continue to do well.
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The stocks don’t look stupid expensive given reasonable projections on future growth rates.
I will leave you with this economic assessment from former Federal Reserve Vice Chair Lael Brainard.
“So the economy at the top level is strong, but again, it’s being driven by this really important set of investments in AI. The rest of the economy under the hood is really stuck,” Brainard told me at Yahoo Finance’s Invest event in November.
“Clearly, people in the lower half, even the lower three-quarters of the income distribution, are really concerned about affordability,” Brainard said. “So they’re very worried about that, and they’re worried that their job opportunities are not as good as they were a year or two years ago. You see that in the consumer sentiment surveys. Whereas that top 10% of consumers, their housing values have gone up, and, of course, their stock portfolios are very positive.”
Source: https://finance.yahoo.com/news/why-these-2-stocks-have-shockingly-blown-away-nvidia-133023103.html
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