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Dollar Tree, Inc. (NDAQ: DLTR) shares rose sharply on the day after rival Family Dollar Stores, Inc. (NYSE: FDO) reported better-than-expected earnings. The discount retail chain reported a 7 percent increase in net income and rising operating margins as more Americans are looking for value and convenience in today's tough economic environment. Companies like Wal-Mart Stores, Inc. (NYSE: WMT) have been the largest benefactors, but dollar stores are quickly rising the ranks.

Companies like Dollar Tree and Family Dollar Stores have benefited handsomely from the twin benefits of the federal stimulus package and a sharp decline in consumer credit. Cash-poor customers have trended towards discount retailers like Wal-Mart and dollar stores in order to maximize the value of their dollars. Dollar stores are very close to home and offer the cheapest products available anywhere, which is very appealing in today's environment.

"Today, more Americans are looking for value and convenience, and our stores are well-positioned to meet that need," said Howard R. Levine, Chairman and Chief Executive Officer. "Our investments in key consumable areas are providing customers with great values on the basic items they need every day, and our small, neighborhood stores are very convenient for customers in this environment of rising gasoline prices."

Dollar Tree investors are predicting that their stores will see a similar jump in revenues and margins given the similarity in their business. Other companies in the sector, such as 99 Cent Only Stores (NYSE: NDN), also rose sharply on today's news. All in all, these results highlight a trend that is only likely to continue as long as the U.S. economy remains in shambles from a poor housing market and tight consumer credit.

Shares of Dollar Tree rose $1.68, or 5.08%, to $34.75 on the news.

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