99 cents equals $13 in a 'frugal nation'

Posted Jun 11th 2009 11:20AM by Jim Woods
Filed under: Earnings Reports, Consumer Experience

NDN stock Lewis Carroll's classic novel, Alice's Adventures in Wonderland, depicts a topsy-turvy world where logic is the twisted handmaiden of reality. Sometimes I think the stock market is such a world. I mean, where else could 99 cents equal nearly $13?

Of course, I'm referring to the share price of 99 Cents Only Stores (NYSE: NDN). In Wednesday's trade, the shares surged 17.5% to close at $12.61 -- effectively turning 99 cents into nearly $13. Okay, so it's not a literal transformation, but you get the point.

So, why did NDN gap up so much yesterday?

Well, it's because the company blasted past consensus Wall Street estimates for fiscal Q4. The discount store chain said it earned $7 million, or 10 cents per share, besting a 4-cent per share forecast from analysts polled by Thomson Reuters.

Now the fact that a discount retailer would beat Street estimates so easily should come as no surprise. A few weeks ago I wrote about a recent Time magazine cover story describing the the "New Frugality," which is the change in behavior, attitudes, and even values Americans are embracing as a byproduct of the "Great Recession."

Let's face it, consumers want value for their dollar -- or in this case, for their 99 cents -- and that's a huge reason why 99 Cents Only Stores posted such a strong quarter.

So, the question now is: What other stocks are set to soar as a result of the new frugality?

To answer this question, I've compiled a list of recession-oriented, frugal nation stocks ready to make investors grin like the Cheshire Cat.

I say that in this frugal nation, those who take the plunge into the rabbit hole will likely be rewarded handsomely.

Tags: 99 Cents Only Stores, discount retailers, earnings, frugal stocks, inthenews, NDN, retail stocks