Play The Recession: Discount Retailer Stocks

Andrew Fisher
Monday, 3 Nov 2008 | 11:04 AM ET

The troubled economy is steering shoppers away from high-end retailers, toward discount stores. What does that mean for the shares of companies that run the discount stores?

"The stocks have done phenomenally well," Patrick McKeever of MKM Partners told CNBC.

And he thinks they still have room to grow another 10 to 20 percent.


The three publicly-traded "dollar stores" are 99 Cents Only Stores, Family Dollar Stores, and Dollar Tree.

"This 'trade-down' dynamic, which is one of the macro drivers for the fundamental outperformance for these names, I think it's actually accelerating right now, and I see it continuing well into next year," McKeever said.

He does have one caveat:

"I'm not saying that these are recession-proof stocks, but they're definitely recession-resistant," he said.

Profiting From Discount Stores
Troubled economic times presents a unique investment opportunity in discount retailers, with Patrick McKeever, MKM Partners senior equity analyst


Neither McKeever nor his family owns shares in 99 Cents Only Stores, Family Dollar Stores, or Dollar Tree, and his firm has no securities-related business relationship with any of them.


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