No I'm not talking about the Bush Administration because there are probably tons of pro working on the national budget issue. And no this post is not about Fed Chief Bernanke since I believe Mr. Bernanke himself is smart enough to handle the challenging economy.
I'm talking about you and me - fellow American Citizens. First is the skyrocketting gasoline price now at $3 per gallon. Then there is the ballooning home price which drives up the home ownership cost. This follows with expieration of teaser rate of those adjustable mortgage which cut into a big portion of the monthly family budget. Combine with the increasing cost of many goods due to the high oil price and we are facing with such a difficult management that even Mr. Bush and Mr. Bernanke would have headache, not to mention the slow growing salary.
So what does all these have to do with this blog? The so called Smart Stock Investment. Aren't we suppose to mention some stock symbols? Well, here we go. So speaking of tight budget on families what's the first store that comes to your mind? Macys? (you got to be kidding) Sears? or even Wal-Mart? No the store I want to talk about here is selling even cheaper stuff.
So ever heard of the Dollar Store? or 99c Only Store? If you have never been to any of these stores basically what these stores offer are everything for a dollar. Yes, everything from milk, snacks, cleaners, knife to book, photo frame and cloths. Basically you are looking at a mini Wal-Mart, except everything only cost a dollar or less.
When you see the stock price of these company it is not at a huge discount though. And when the economy tank during from 2001 after the dot bomb, stock such as Family Dollar Store (FDO
) actually went up 100% from $20 in 2001 to $40 in 2004 and then it started to go south again, just as the economy is hot again.
So now that the family budget is tight again, look for the following stocks to do well:
- Family Dollar Store (FDO): the company has 6,400 stores in 44 states and the stock has just rose back from 52 weeks low of $24.23 in August and is now trading at $28.54.
- Dollar Tree Stores Inc. (DLTR): the company operates 3,334 stores in 48 states. Although the stock is trading near its 52 weeks high at $41.82 per share, its aggressive stock buyback shows the management team is bullish about the outlook of the discount shop.
- 99c Only Store(NDN): the company has most of its stores in California and are significantly smaller than the other two with 251 stores in 4 states. Although the stock price is less than the other two at $10.49, its P/E ratio is three times more than the other two so is considered more expensive.