Dollar stores got aggressive as the rest of retail hunkered down, and Wall Street likes the strategy

Key Points
  • Analysts say Dollar General and Dollar Tree have room to run in 2021, despite their strong sales gains and stock performances during the coronavirus pandemic.
  • Dollar stores, especially those that sell food, "tend to do well during times of economic uncertainty," said Michael Lasser, a retail analyst for UBS.
  • Dollar General is expanding a new store concept and pressing ahead with aggressive expansion plans for its primary banner.
  • Dollar Tree is adding higher-priced merchandise to many of its stores and could pick up sales as consumers can resume social gatherings and parties.

As many retailers have shuttered stores and catered to a shrinking number of consumers, two major dollar-store chains have gone a completely different way. Dollar General and Dollar Tree have pushed for higher profits and appealed to new shoppers. Those aggressive moves have Wall Street analysts and investors excited.

Shares of the companies both touched their 52-week high toward the end of 2020, as investors bet on strong performances buoyed by factors beyond the coronavirus and economy.