All this is largely true of the so-called dollar-store retailers, those mushrooming retailers such as Dollar Tree (DLTR - Get Report), Fred's (FRED) and Dollar General (DG - Get Report) that comprise the second-fastest growing retailing sector behind supercenters, with sales growth of about 5.5% a year. And the growth story looks far from over.
"We anticipate that this channel will be a strong growth channel compared to others," said Sandy Skrovan, vice president of retail-research firm Retail Forward. Skrovan believes the group is well-positioned to keep growing into untapped markets: Retail Forward estimates the U.S. market can support another 15,000 dollar stores. "The big players continue to roll out stores -- Family Dollar (FDO - Get Report) and Dollar General are rolling out a store a day."
While the stocks have had an impressive run over the past few years, a recent pullback among the major participants in late 2003 may present a good opportunity to pick up these stocks on the cheap."The gains these stocks have seen are really just the beginning," said James Altucher, a partner at hedge fund Subway Capital and contributor to Street Insight, TheStreet.com's sibling publication. So let's take a closer look at the group, exploring why the demographics and competitive landscape are playing to its favor.