This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Rich Future for Dollar Stores

How many retailers can you say are not seriously threatened by an economic downturn, the Internet, Wal-Mart (WMT) or less-than-stellar store locations?

All this is largely true of the so-called dollar-store retailers, those mushrooming retailers such as Dollar Tree (DLTR), Fred's (FRED) and Dollar General (DG) 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) 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,'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.


The perception is that dollar stores are primarily the province of lower-income families in urban or rural areas, but research shows the group has been making great inroads into all swaths of U.S. consumers. According to Retail Forward, the percentage of shoppers making a purchase at a dollar store over a 12-month period totaled 54% in 2002 -- up from 43% in 1997. Meanwhile, the percentage of frequent dollar-store shoppers -- customers who patronized the stores at least twice a month -- jumped to 28% from 17% in that time period.

1 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,959.44 +154.64 0.87%
S&P 500 2,078.54 +7.89 0.38%
NASDAQ 4,781.4240 +16.0440 0.34%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs