3 Inflated Consumer Stocks That Concern Us

The stocks featured in this article have all approached their 52-week highs. When these price levels hit, it typically signals strong business execution, positive market sentiment, or significant industry tailwinds.

While momentum can be a leading indicator, it has burned many investors as it doesn’t always correlate with long-term success. All that said, here are three stocks getting more buzz than they deserve and some you should buy instead.

Dollar General (DG)

One-Month Return: +25.6%

Appealing to the budget-conscious consumer, Dollar General (NYSE:DG) is a discount retailer that sells a wide range of household essentials, groceries, apparel/beauty products, and seasonal merchandise.

Why Do We Think Twice About DG?

1. Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
2. Widely-available products (and therefore stiff competition) result in an inferior gross margin of 30% that must be offset through higher volumes
3. Falling earnings per share over the last three years has some investors worried as stock prices ultimately follow EPS over the long term

Dollar General’s stock price of $126.14 implies a valuation ratio of 18.1x forward P/E. To fully understand why you should be careful with DG, check out our full research report (it’s free for active Edge members).

Macy's (M)

One-Month Return: +9.5%

With a storied history that began with its 1858 founding, Macy’s (NYSE:M) is a department store chain that sells clothing, cosmetics, accessories, and home goods.

Why Are We Out on M?

1. Recent store closures and weak same-store sales point to soft demand and an operational restructuring
2. Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
3. Earnings per share have contracted by 22.4% annually over the last three years, a headwind for returns as stock prices often echo long-term EPS performance

Macy's is trading at $22.53 per share, or 10.3x forward P/E. If you’re considering M for your portfolio, see our FREE research report to learn more.

Walmart (WMT)

One-Month Return: +12.3%

Known for its large-format Supercenters, Walmart (NYSE:WMT) is a retail pioneer that serves a budget-conscious consumer who is looking for a wide range of products under one roof.

Why Does WMT Worry Us?

1. Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 5.4% for the last three years
2. Commoditized inventory, bad unit economics, and high competition are reflected in its low gross margin of 24.8%
3. Poor expense management has led to an operating margin of 4.2% that is below the industry average

At $115.01 per share, Walmart trades at 39.8x forward P/E. Check out our free in-depth research report to learn more about why WMT doesn’t pass our bar.

High-Quality Stocks for All Market Conditions

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today

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