Family Dollar (NYSE: FDO) has had quite a run. Over the year shares in the super discount store chain have risen by roughly 65%, rising from just under $20 on April 7, 2008 to a closing price of just over $33 on April 6, 2008. The obvious reason is the awful economy.

Earnings later this morning are hotly anticipated. Our Piqqem Sentiment for Family Dollar is positive but beginning to trend down. Will cheap keep beating the Street?

In The Cabot Benjamin Graham Value Letter -- which assesses stocks based on Graham's value investing critera, editor J. Royden Ward takes a look at Wal-Mart Stores (NYSE: WMT).

"In this month's Classic Benjamin Graham Value Model, our calculation suggests that the Dow is overvalued at 12,370 and undervalued at 8,305; as such, today the market is extremely undervalued.

"This low-risk environment means it's probably a great time to add risk by dabbling in our recommended stocks such as Wal-Mart Stores.

"How cheap is it? The recent decline in WMT shares has created an outstanding buying opportunity for investors. WMT shares now sell at only 12.3 times forward EPS with a dividend yield of 2.0%.

I grew up in the 1970s and recall fondly watching the TV series "Dallas" with my family on Friday nights. Everything on the culturally sensational show was big, including its storylines.

Of course, one of my favorites was "who shot J.R.?" But another favorite was the return of Bobby Ewing after a supposed death that was resolved by stating the entire season was a dream.

I like to use the dream analogy for stocks that have made a round trip journey in a short period of time. If a stock goes up only to return to the level previously, it is as if the investor woke from a dream and the stock never actually moved up.

Such is the story of closeout retailer Big Lots (NYSE: BIG).

Shares started the year around $15 per share. Enthusiasm over profits and performance as consumers in a struggling economy sought lower-priced options fueled a gain in BIG.

Shares more than doubled in value, but hit a roadblock in late August. At that time, earnings that beat estimates were not enough to keep the momentum going. I wrote about the company at that time and suggested that investors in BIG should take money off the table.

Not all retailers are created equal.

Some are better than others and that has become abundantly clear during this economic recession. While the entire sector has been struggling, there are pockets of strength.

That strength comes from the discounters. Led by discount king, Wal-Mart (NYSE: WMT), consumers have been flocking to these stores looking for a bargain. Nothing motivates more than a deal on a cash-starved budget.

Wal-Mart and others have been cleaning up in this environment. Yes, the operating environment is challenging no matter what your prices, but those with the lowest prices are faring much better than those with higher ones.

That is why yesterday's news from Costco (NASDAQ: COST) was so disturbing.

The company announced its first-quarter earnings, and the results were less than stellar.

COST stated that in the period that ended Nov. 23, profits were only up fractionally as compared to the same period last year, even though revenue was up 4%. The company generated a profit of 60 cents per share that missed analyst expectations by 2 cents.

Although it's not a big miss in the scheme of things, I'm disappointed with the results.

When the Bureau of Economic Research declared that the recession had officially begun in December 2007, the entire retail sector shrugged its shoulders and said, "No kidding."

Shares of companies that deal directly with the consumer, except for the deep discount retailers, have known for some time that the economy was struggling. Sales have been declining steadily and, with the deteriorating operating environment, shares of the retail stocks have been absolutely crushed.

The entire retail group is one of the biggest losers in the market this year, with some stocks down 80% to 90%.

That said, those retailers that offer big discounts, including Wal-Mart (NYSE: WMT) and Big Lots (NYSE: BIG), are doing much better on a relative basis.