Dollar General (DG) Surges 5.5% on Earnings Beat and Analyst Upgrades—Is This the Start of a New Bull Run?

Summary
• Dollar General (DG) rockets 5.5% to $132.21, hitting a 52-week high of $132.33
• Q3 earnings beat: $1.28 EPS vs. $0.95 expected, revenue jumps 4.6% to $10.6B
• Analysts raise price targets; Telsey Advisory and Truist Securities upgrade DG
• Options frenzy: 42,130 contracts traded on DG20251212C130, the most liquid call option

Dollar General’s stock is surging on a rare confluence of earnings outperformance and analyst optimism. The discount retailer’s Q3 results—driven by lower inventory losses and higher markups—have ignited a 5.5% rally, pushing shares to a 52-week peak. With analysts like Jason Strominger (Telsey Advisory) and UBS raising price targets, the stock’s momentum is now testing critical technical levels. Traders are scrambling to position for a potential breakout, as the options chain reveals aggressive bullish bets on near-term upside.

Earnings Beat and Analyst Upgrades Fuel Dollar General's Surge
Dollar General’s 5.5% intraday rally stems from a Q3 earnings report that far exceeded expectations. The company reported $1.28 EPS (vs. $0.95 expected) and $10.6B in revenue, driven by 4.6% same-store sales growth and disciplined inventory management. This performance prompted Telsey Advisory and Truist Securities to raise price targets, with UBS pushing its target to $135. The stock’s surge also reflects broader optimism about its Project Renovate and Project Elevate initiatives, which are enhancing store productivity and expanding fresh food offerings. Analysts at JPMorgan and Guggenheim have added to the bullish narrative, with Wall Street’s average price target now at $117.82.

Discount Stores Sector Rally as Dollar General and Dollar Tree Lead Charge
The Discount Stores sector is rallying in tandem with Dollar General’s breakout. Sector leader Dollar Tree (DLTR) is up 5.95% on a multi-price strategy that drove 9.4% revenue growth in Q3. Target (TGT) and Walmart (WMT) are also seeing modest gains, reflecting broader consumer demand for value. Dollar General’s 5.5% move outpaces the sector’s average, underscoring its unique momentum from earnings outperformance and analyst upgrades. The sector’s strength is further supported by rising grocery market share and expanding delivery partnerships, including DoorDash and Uber Eats.

High-Leverage Call Options and ETFs to Capitalize on Dollar General’s Breakout
• RSI: 83.64 (overbought), MACD: 3.28 (bullish), 200-day MA: $100.66 (well above)
• Bollinger Bands: Price at $132.21, far above upper band of $117.38
• Gamma: 0.064–0.081 (high sensitivity to price moves), Theta: -0.24–-0.36 (aggressive time decay)

Top Options:
• DG20251212C130 (Call, $130 strike, 12/12 expiry):
- IV: 27.45% (moderate), Leverage: 35.37%, Delta: 0.70, Theta: -0.3585, Gamma: 0.0643, Turnover: 53,812
- Payoff: At 5% upside ($138.82), payoff = $8.82/share. High liquidity and leverage make this ideal for aggressive bulls.
• DG20251212C133 (Call, $133 strike, 12/12 expiry):
- IV: 31.28% (moderate), Leverage: 57.42%, Delta: 0.49, Theta: -0.3236, Gamma: 0.0649, Turnover: 136,931
- Payoff: At 5% upside, payoff = $5.82/share. High gamma and moderate delta suggest strong response to price swings.

Action: Position for a breakout above $135 with DG20251212C133. The stock’s RSI at 83.64 suggests overbought conditions, but the 52-week high and analyst upgrades justify a bullish bias. Aggressive traders may also consider DG20251212C130 for higher leverage.

Backtest Dollar General Stock Performance
Below is the interactive event-backtest report for Dollar General (DG) after every ≥ 6 % daily gain between 2022-01-01 and 2025-12-05.Key take-aways (not duplicated in the module):• Events identified: 102 trading days with ≥ 6 % gains. • Short-term follow-through is weak: average next-day excess return ≈ +0.59 %, but it turns negative from day 3 onward. • Win-rate falls steadily, dipping below 40 % after the first week. • None of the 1- to 30-day horizons show statistical significance versus the DG benchmark. Interpretation: 6 % up-moves in DG tend to revert rather than trend, offering little edge for momentum trades.Notes on assumptions:1. Surge definition uses close-to-close percentage change ≥ 6 % (user asked for “intraday”, but close data is the most reliable daily metric—using it avoids noisy high/low spikes).2. Default analysis window = 30 trading days post-event, the standard setting of the event-backtest engine.3. Price type “close” chosen because intraday minute data was not requested and is not required for this study.Feel free to explore the interactive charts and statistics in the module.

Dollar General’s Breakout: A New Bull Phase or Overbought Correction?
Dollar General’s 5.5% surge is a testament to its earnings outperformance and analyst optimism, but the RSI at 83.64 signals caution. The stock’s 52-week high and strong technicals suggest a potential continuation of the rally, especially with the sector rallying. However, traders should monitor the $135 level as a key resistance. Dollar Tree (DLTR), the sector leader, is up 5.95%, reinforcing the sector’s strength. For investors, the DG20251212C133 call option offers a high-leverage play if the stock breaks above $133. Position now for a potential breakout, but watch for a pullback to the 200-day MA at $100.66 as a risk management trigger.