^{Source: Fortune}

CVS and Dollar General Rise From the Ashes of Industry Shake-Ups

Once trailing behind their peers, CVS Health (CVS) and Dollar General (DG) are now enjoying a robust market rebound, according to CNBC’s Jim Cramer. Speaking on "Mad Money," Cramer credited their resurgence to a strategic position he dubbed “sole survivor status.”

“Investors are pouring into these names because they’re the last strong players standing in industries facing massive upheaval,” said Cramer on Tuesday. “It’s a survival-of-the-fittest situation — and these two are looking fit.”

What Caused the Dip? Earnings Misses and Sector Pressures

In 2024, both companies faced steep declines:

• CVS Health disappointed investors by missing earnings estimates for three consecutive quarters. Its health insurance division, Aetna, was particularly problematic, suffering from higher-than-expected medical cost ratios.
• Dollar General, meanwhile, was weighed down by soft earnings reports and broader macroeconomic concerns. Wall Street grew wary as the discount chain struggled to maintain margins, especially under the looming pressure of global tariffs and rising import costs.

Cramer noted that market pessimism had taken over both stocks — until key changes in 2025 shifted the narrative.

CVS: Rebound Fueled by Strong Earnings and Rival Retreat

CVS turned heads in February 2025 with an earnings beat that surpassed expectations by nearly 12%, helping it regain investor confidence. The company also reinforced its full-year guidance, despite having trimmed its forecast multiple times last year.

Cramer emphasized that a major catalyst behind CVS' resurgence was the implosion of Walgreens, its top competitor. Walgreens announced in March that it would go private, selling to a private equity firm. The move is expected to lead to hundreds of store closures, according to Bloomberg reports.

Meanwhile, Rite Aid officially filed for bankruptcy, closing hundreds of underperforming stores. This effectively leaves CVS as the last major drugstore chain operating at scale in the U.S., giving it unmatched retail presence and market share in the pharmaceutical sector.

“CVS has now become a textbook example of a recession-proof stock,” Cramer said. “They’re not just surviving — they’re thriving in a landscape where their rivals are collapsing.”

Dollar General: Gaining Ground as Dollar Tree Falters

Dollar General, too, has made strides despite a mixed Q1 report. While revenue growth was modest — about 3.4% year-over-year — the company has been focusing on operational improvements, including revamping store layouts and expanding its fresh food offerings.

The biggest tailwind for Dollar General? Its main rival, Dollar Tree, has announced plans to sell Family Dollar to private equity investors, citing chronic underperformance and continued losses from the acquisition made in 2015.

Cramer predicted that the Family Dollar sale would lead to hundreds of store closures, which Dollar General could capitalize on — especially in rural and low-income communities.

Additionally, an analyst report from Citi suggested that Dollar General is less vulnerable to tariff impacts because over 75% of its sales come from consumables like food and household essentials, rather than discretionary products.

“They’ve found their footing just as their top rival is stumbling,” said Cramer. “In retail, that’s a golden opportunity.”

Final Take: Two Stocks Reaping the Benefits of Industry Turmoil

Cramer concluded that both CVS and Dollar General are positioned to dominate in 2025 due to a combination of operational resilience, recession-proof business models, and the collapse of their key competitors.

“When your competition is downsizing, restructuring, or disappearing altogether, the market tends to notice,” he said. “CVS and Dollar General are the clear winners in industries under siege.”

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