I would rather own a stock that is hitting new highs than one that is going down.

I would rather own a stock that is hitting new highs that one that is hitting new lows!

This is where valuation comes into play.

Data from Best Stocks Now App

Dollar Tree is currently trading at 17 times forward earnings, which is a slight discount to the market. It's expected to grow those earnings by 17%, so it has a PEG ratio of 1.01.

All things equal, you should get 17% per year in returns on DLTR going forward. It's simple math, but that doesn't necessarily mean there's a guarantee. You still have to babysit that holding every day to make sure it's staying on track.

Now every once in a while, the stock is going to be derailed a little bit. But as long as it stays on course, stay with it. You want big gains in the market. If it goes, of course, you sell.

Dollar Tree is currently a stock that is exhibiting to those of Wal-Mart many years ago.

Stock Chart

So would I buy a stock that is hitting a new all-time high? So far we've discussed the performance and valuation of DLTR, but the last part is checking that stock chart.

Courtesy of StockCharts.com

Wednesday, DLTR broke out to a new all-time high. If the valuation justifies it, and in DLTR's case it does, I would absolutely buy a stock that's hitting a new high.

So, it's your choice -- you could own a big, stodgy, old stock of yesteryear, or you could drop down a notch into the second or third tier and shop around the aisles of the stock market that still offer big potential.

DLTR comes in at #83 out of 3,546 stocks. Clients of Gunderson Capital Management are currently long the stock.

Data from Best Stocks Now App

At the time of publication, Gunderson was long DLTR.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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