Dollar General stock is outperforming the broader market
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Discount retailer Dollar General (DG) has been outperforming the broader market amid economic uncertainty, with new 2025 highs in February, March, and April. Now that the stock has broken above the $88 level, an area of resistance in late March and in September of 2023, it looks like a good time to weigh in on its next leg higher.
There is more technical support in place too. The upsloping 20-day moving average and newly recovered 200-day moving average both coincide with the aforementioned $88 level. Plus, this month’s low was just above $84, four times the stock’s initial public offering (IPO) price of $21.
An unwinding of pessimism could provide tailwinds as well. Short interest is slowly retreating from late-January all-time highs, but still represents 5% of the stock’s available float. Plus, despite the shares’ year-to-date gains, 21 of the 32 analysts in coverage still carry a “hold” rating.
It’s worth noting that implied volatility (IV) for the shares is in line with 63-day historical volatility (HV). Our recommended call ratio has a leverage ratio of 5.6, and will double on an 18.6% pop in the underlying security.