With more than 50% of the U.S. population fully vaccinated, people are again patronizing brick & mortar stores. This is evident from recent reports stating better-than-expected retail sales in September, despite rising inflation. So, discount retailers Costco (COST) and Dollar General (DG) should benefit from the increased foot traffic and consumer spending. But which of these stocks is a better choice now? Read more to find out.Costco Wholesale Corporation (NASDAQ:COST), which is headquartered in Issaquah, Wash., operates membership warehouses in the United States, Puerto Rico, Canada, the United Kingdom, Mexico, Japan, Korea, Australia, Spain, France, Iceland, China, and Taiwan. It offers branded and private-label products across a range of merchandise categories. In comparison, Goodlettsville, Tenn.-based Dollar General Corporation (NYSE:DG) provides various merchandise products in the Southern, Southwestern, Midwestern, and Eastern United States. Its offerings include consumable items, seasonal items, home products, and apparel.
Discount stores witnessed a significant decline in foot traffic last year due to the COVID-19 pandemic. However, with substantial progress on the vaccination front, students heading back to school, and workers returning to their jobs, retail sales are increasing this year. According to an advance estimate from the U.S. Census Bureau, retail sales in September beat analysts’ expectations, despite inflationary pressures. So, discount stores offering merchandise at slashed prices should attract more customers, and both COST and DG are well-positioned to capitalize on the rebounding demand.
COST's shares have gained 24.6% in price over the past six months, while DG has declined 1.4%. In terms of their past year’s performance, COST is again the winner with 21.1% gains versus DG’s 3.6% slump. Furthermore, COST’s 22.6% price gains year-to-date compare with DG’s 1.6% returns.