It's a 'Dollar Tree' Economy

Thursday, 23 Aug 2007 | 11:20 AM ET

This is a Dollar Tree economy, Cramer said tonight on Mad Money.

Even if the Federal Reserve cuts rates fast enough to save the 7 million Americans Cramer predicts could lose their homes to this mortgage mess, people are still going to be spending less, he said.

Dollar Tree: A Good Bargain
Mad Money host Jim Cramer likes Dollar Tree and says it's the best dollar store play right now.

So as consumers go looking for cheaper goods to save money, dollar stores start looking like a good investment.

Dollar Tree recently reported its sixth straight quarter of increasing traffic and its second straight quarter of higher sales per customer. It’s also implementing interesting growth strategies by accepting food stamps and multiple pricing. Yes, a dollar store is now going to have items that cost more than $1.

Cramer said that Dollar Tree also is in a good position to grow its store count. Now that Dollar General is private, its count should be dropping as it moves into cost-cutting mode. And Family Dollar already has twice the number of stores as Dollar Tree, so the benefits of expansion are much more on the side of DLTR.

“That makes it hands down a better-quality company,” Cramer said.

Also, he recommends that investors who want to buy DLTR should wait at least five days before buying.

Questions for Cramer? madmoney@cnbc.com

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