60%+ returns in 2025: Here’s how AI-powered stock investing has changed the game
Investing.com -- Dollar store stocks have shown remarkable resilience in the current economic climate, with several standouts delivering impressive returns for investors. According to WarrenAI, using Investing Pro’s metrics including Fair Value, Pro scores, technicals, and analyst targets, certain companies in this sector present particularly compelling opportunities.
Five Below (NASDAQ:FIVE) emerges as the leader among dollar store investments, demonstrating exceptional momentum with a 78.4% one-year return that outperforms all peers in the sector. Trading at $157.32 with a market capitalization of $8.55 billion, the company boasts an analyst target upside of 30.6%, suggesting significant growth potential. Five Below’s strong EBITDA margin of 12.7% and projected EPS growth of 12.4% for FY26 reflect its solid operational efficiency. Recent analyst upgrades and 18 upward earnings revisions signal growing market confidence, while technical indicators show a strong buy across most timeframes. However, investors should note its relatively high forward P/E ratio of 30.0x and potential tariff risks.
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1. Five Below (NASDAQ:FIVE): The growth machine continues to impress with trend-savvy merchandising and explosive post-pandemic expansion. Its Pro Score of 2.82 (C) and fair value assessment of $160.80 indicate the stock is currently trading near its intrinsic value, with significant upside potential based on analyst consensus targets.
In recent news, Five Below announced the appointments of a new Chief Financial Officer and Chief Merchandising Officer. Additionally, UBS reiterated its Buy rating on the company, citing merchandising improvements, while Evercore ISI raised its price target.
2. Dollarama (TSX:DOL): This Canadian retailer stands out as the defensive play in the sector, trading at C$199.13 with a substantial market cap of C$54.10B. Dollarama boasts best-in-class profitability with an industry-leading EBITDA margin of 26.5%. Despite its impressive 36.2% one-year return and strong financial health, the stock appears overvalued according to Pro’s fair value estimate of C$150.14, suggesting a potential 24.6% downside risk.
Dollarama reported strong second-quarter 2025 financial results, with earnings per share surpassing analyst expectations. Separately, Bernstein initiated coverage on the company with an Outperform rating.
3. Dollar General (NYSE:DG): Currently trading at $101.70, this turnaround story offers the sector’s only meaningful dividend yield at 3.4%. With a market cap of $22.38B, Dollar General shows promising recovery signs, including a sector-leading projected EPS growth of 20.6% for FY26. Analysts have set a mean target of $119.39, indicating a 23.8% upside potential, while its attractive forward P/E of 16.5x suggests reasonable valuation.
Dollar General has appointed Emily Taylor as its new chief operating officer to oversee key divisions. The company also received positive analyst updates, with both UBS and Truist raising their price targets and Bernstein reiterating its Outperform rating, citing signs of a business turnaround.
4. Dollar Tree (NASDAQ:DLTR): Trading at $100.22 with a market cap of $20.55B, Dollar Tree has delivered a solid 53.3% one-year return. However, with a fair value estimate of $98.72 and high debt levels, caution is warranted despite the analyst target upside of 9.1%. The company’s new pricing strategy and projected 17.0% EPS growth for FY26 keep it relevant, though recent analyst downgrades suggest most positive developments may already be priced in.
Recently, Dollar Tree reaffirmed its fiscal 2025 outlook and announced a long-term target for annual earnings per share growth of 12-15% through 2028. The company also increased the limit of its commercial paper program to $2.5 billion.
The dollar store sector continues to evolve amid changing consumer behaviors and economic pressures, with these four companies representing different investment approaches from growth to value to turnaround opportunities.
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