DLTR Preview: Benefits From Substitution Effect

Dollar Tree (DLTR - commentary - Cramer's Take), the discount retailer with fixed product prices of $1.00 or less, will be reporting third-quarter 2008 results and conduct its earnings conference call before the market opens on Tuesday.

The company is expected to earn 44 cents per share on revenue of $1.11 billion. In the year-ago quarter, Dollar Tree earned 38 cents per share.

Earlier this month, Dollar Tree pre-reported third-quarter sales of $1.11 billion. This represented an 11.6% year-over-year increase in sales and 6.2% same-store comparables.

Management attributed strong back-to-school and Halloween sales for its positive results. I think we can clearly attribute Dollar Tree's gains to the substitution effect, which is coming from consumers trading down from the higher-priced retailers.

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Know What You Own: Dollar Tree operates in the discount variety store industry, and some of the other stocks in its field include Wal-Mart (WMT - commentary - Cramer's Take), Target (TGT - commentary - Cramer's Take), Costco (COST - commentary - Cramer's Take), Family Dollar (FDO - commentary - Cramer's Take), BJ's Wholesale Club (BJ - commentary - Cramer's Take) and Big Lots (BIG - commentary - Cramer's Take). For more on the value of knowing what you own, visit TheStreet.com's Investing A-to-Z section.

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At the time of publication, Rothbort had no positions in the stocks mentioned, although positions can change at any time.

Scott Rothbort has over 20 years of experience in the financial services industry. In 2002, Rothbort founded LakeView Asset Management, LLC, a registered investment advisor based in Millburn, N.J., which offers customized individually managed separate accounts, including proprietary long/short strategies to its high net worth clientele. He also is the founder and manager of the social networking educational Web site TheFinanceProfessor.com.

Immediately prior to that, Rothbort worked at Merrill Lynch for 10 years, where he was instrumental in building the global equity derivative business and managed the global equity swap business from its inception. Rothbort previously held international assignments in Tokyo, Hong Kong and London while working for Morgan Stanley and County NatWest Securities.

Rothbort holds an MBA in finance and international business from the Stern School of Business of New York University and a BS in economics and accounting from the Wharton School of Business of the University of Pennsylvania. He is a Term Professor of Finance and the Chief Market Strategist for the Stillman School of Business of Seton Hall University.

For more information about Scott Rothbort and LakeView Asset Management, LLC, visit the company's Web site at www.lakeviewasset.com. Scott appreciates your feedback; click here to send him an email.