Dollar Tree

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Even AutoZone's price performance looks pale compared to that of Dollar Tree ( DLTR), though. Shares of the deep-discount retailer have rallied more than 19% this year as recessionary headwinds enticed consumers to trade down to DLTR's offerings. With more than 4,000 stores, Dollar Tree is the largest "dollar store" concept in the country.

In a business where cost is really everything, Dollar Tree shines. The firm generates margins that ring in consistently near 7%, high for any retailer but particularly high for a deep-discount name such as Dollar Tree. Since the start of the recession, competition has been slowly encroaching from other discount and big-box retail names (such as Wal-Mart ( WMT) and Target ( TGT)), making Wall Street a bit too gun-shy about DLTR's growth prospects. But it's actually Dollar Tree's push into competitors' price points that make the stock most attractive right now.

DLTR has been building out non-dollar concepts in the last few years, a move that should do well for margins and could be particularly critical if inflation gets as high as some analysts predict in 2011. As long as uncertainty rules the markets, Dollar Tree should be a relative bastion of safety for investors.

Dollar Tree is one of TheStreet Ratings' top-rated multiline retail stocks.

To see all of this week's Rocket Stocks in action, check out the Rocket Stocks portfolio at Stockpickr.

-- Written by Jonas Elmerraji in Baltimore.


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At the time of publication, author had no positions in stocks mentioned.

Jonas Elmerraji is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on

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