Family Dollar Stores Inc. (FDO): Today's Featured Services Winner

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

Family Dollar Stores ( FDO) pushed the Services sector higher today making it today's featured services winner. The sector as a whole closed the day down 0.2%. By the end of trading, Family Dollar Stores rose $2.01 (3.1%) to $66.48 on heavy volume. Throughout the day, three million shares of Family Dollar Stores exchanged hands as compared to its average daily volume of 1.5 million shares. The stock ranged in a price between $64.52-$67.13 after having opened the day at $64.73 as compared to the previous trading day's close of $64.47. Other companies within the Services sector that increased today were: Dex One ( DEXO), up 16.7%, PokerTek ( PTEK), up 16.7%, Cosi ( COSI), up 15.8%, and SuperMedia ( SPMD), up 14.5%.
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Family Dollar Stores, Inc. operates a chain of self-service retail discount stores primarily for low- and middle-income consumers in the United States. Family Dollar Stores has a market cap of $8.17 billion and is part of the retail industry. The company has a P/E ratio of 19.7, above the S&P 500 P/E ratio of 17.7. Shares are up 12.2% year to date as of the close of trading on Tuesday. Currently there are seven analysts that rate Family Dollar Stores a buy, two analysts rate it a sell, and 10 rate it a hold.

TheStreet Ratings rates Family Dollar Stores as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

On the negative front, Newlead Holdings ( NEWL), down 17.9%, DLH Holdings ( DLHC), down 10.3%, Seanergy Maritime Holdings ( SHIP), down 10.1%, and RLJ Entertainment ( RLJE), down 8.7%, were all laggards within the services sector with Target ( TGT) being today's services sector laggard.

For investors not wanting singular stock exposure, ETFs may be of interest. Investors who are bullish on the services sector could consider iShares Dow Jones US Cons Services ( IYC) while those bearish on the services sector could consider ProShares Ultra Short Consumer Sers ( SCC).

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