Dollar Tree Stores

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Deep discount retailers haven't been a big part of our weekly Rocket Stocks lists for a while now -- at least not since the depths of the recession, when the few stock investors still willing to pour cash into the market were buying dollar stores with both hands. But Dollar Tree Stores ( DLTR) is making our list this week, amid an upswing in analyst sentiment for shares.

Dollar Tree is the largest dollar-store chain in the country, with more than 4,000 stores spread across 48 states and four different retail brands. While it may seem unintuitive, dollar stores actually boast much deeper margins than most retailers, thanks to a focus on cost management rather than product availability. That best-in-breed retail ability should keep Dollar Tree throwing off cash in 2012.

So should economic hiccups in the year ahead. While unemployment numbers have made some strides in the last couple of years, the number of unemployed and underemployed remain extremely high -- that factor should keep shoppers in DLTR's bargain-filled stores, especially on the discretionary front. Even if shoppers trade up to pricier stores to get staples, Dollar Tree should still be able to capture seasonal discretionary spending.

More importantly, with investors showing major anxiety about equities right now, Dollar Tree provides some exposure to a very defensive name. Investors should be keeping an eye on May 17 earnings.

Dollar Tree shows up on a recent list of 6 Companies Battling for Americans' Grocery Money.

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


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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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