Dollar Tree (NASDAQ:DLTR) doesn’t fit in with the other four upscale stores, but it does fit right into the New Frugal investment strategy. Dollar Tree is the best super discount store, and it is expanding fast and intelligently — adding groceries and other must-have items. DLTR caters to the poor and lower-income household consumers who shop day to day and week to week. Also, since it is small compared to Wal-Mart (NYSE:WMT), Dollar Tree’s discounts from suppliers are increasing as its volume increases, giving it solid margins that are not shrinking as fast as others.
The super-deep discounters have huge cost advantages over traditional discount stores — meaning Dollar Tree actually can under-price Wal-Mart on some items.
This article originally appeared on Traders Reserve.