It comes as no surprise that the top performer among the stocks comprising the S&P 500 Index is a retailer focused on delivering quality products and services at a discount price.

Family Dollar Stores (NYSE: FDO) increased nearly 30% in 2008, compared with a decrease of 40% in the S&P 500.

Defying the expectations of gloomy analysts who are paralyzed by their inability to value companies during the last 12 months, and by short sellers who perceived a price drop following the high level performance in 2008, the stock is continuing its climb as we enter the 2009 trading year.

Family Dollar reported first quarter earnings Wednesday, which exceeded analysts' expectations and company projections.

Earnings for the period were up by 14%, with revenue increasing by 4.2% and same-store sales up a healthy 2.1%. Market reaction to the report is stunning, with FDO up more than 14% at the close.

Family Dollar CEO Howard Levine, son of founder and Chairman Emeritus Leon Levine, issued a forecast of continued growth for the next quarter and for all of 2009.

The company is now projecting earnings of $1.63 to $1.81 per share for fiscal year 2009. Earlier forecasts were in the range of $1.58 to $1.78. Projections of same-store sales growth for the year were also increased from a range of 1%-3% to 2%-4%.

FDO combines conservative leadership with a consumer-friendly neighborhood store environment, and a product mix appealing to cost-conscious consumers to deliver value and a positive shopping experience. With minimal exposure to price-volatile electronic and apparel inventory, company performance is not likely to be adversely affected by a prolonged economic downturn.

FDO has more than 6,000 locations in 44 contiguous states. The company has effectively managed its rapid growth during the last five years, having opened more than half of its stores during this period.

In the face of rising commodities costs, 99 Cents Only Stores (NYSE: NDN) has been forced into raising prices -- a difficult proposition given that the company's founders didn't take into account inflation when giving the company the name that has stuck with it for the past 26 years.

In a rambling press release, CEO Eric Schiffer announced that "In response to dramatically rising costs and inflation, 99¢ Only Stores® is forced to raise its price by almost one full penny to 99.99¢, which is still just below a dollar."

Except that, no, it really isn't because U.S. currency does not come in denominations of less than 1/100th of a penny, and 99 Cents Only Stores will be rounding up. Depending on how it calculates the rounding, consumers will have to buy either 50 or 100 products to realize the savings from the 99.99 cent price point versus the $1 one.

I understand that 99 Cents wants to stay true to the name/motto, but this is pretty lame. Why not just raise the price to $1 and not insult people's intelligence by claiming that this is something other than that? It's intellectually dishonest to say that 99.99 cents is different from $1, because almost no one will spend enough in one visit to realize the savings.

Tom Petruno at the Los Angeles Times makes a strong case [registration required] for strength in companies catering to working-class folks as opposed to hedge funds managers and Hollywood types. The trend has been in the opposite direction in recent years. Consider this: "On Wall Street, Coach Inc. (NYSE: COH) versus Wal-Mart Stores Inc. (NYSE: WMT) hasn't been much of a contest since 2000. The high-end leather goods maker's stock price is up 1,326% since then; shares of Wal-Mart, the retailer to the masses, are down 9% in the period."

But here's what's changed. Wages are rising: "Average weekly earnings of U.S. production workers rose 4.4% in the 12 months through March, according to the Labor Department. That was up from a 3.8% increase in the 12 months ended in March 2006 and a mere 2.6% in the period before that." Worker incomes rose 1.1% in the first quarter, the largest such rise in six years.

At the same time, growth in corporate profits is slowing. So if you decide to go with the hypothesis of working- and middle-income people having more money to spend, here are two stock picks:

America's Car-Mart (NASDAQ: CRMT) is the other company from Bentonville, Arkansas. These guys specialize in buy-here, pay-here used cars, and have struggled recently with an increase in bad loans, but are making efforts to tighten up. If people are making more money, they'll want new cars, and they might even be able to afford their car payments. Pat Dorsey of Morningstar suggest CarMax Inc. (NYSE: KMX), but Car-Mart is smaller and looks a little cheaper. Plus they're from Bentonville, so they must be good.

According to the Wall Street Journal, discount/single-price point stores like Family Dollar Stores Inc. (NYSE: FDO), Dollar Tree Stores Inc. (NASDAQ: DLTR), and the soon to be KKR owned Dollar General Corp. (NYSE: DG) are growing in popularity [subscription required] with consumers, reporting solid same-store sales growth and expanding sales of food products. According to Family Dollar CEO Howard Levine, "The low-income customer is always stressed and always strained. When things like a minimum-wage increase happen, that's a great benefit to them. When gas prices come down, that's a great benefit to them, and conversely when they go the other way, that has a negative impact."

Because of sky-high real estate prices in my area, we have no dollar stores. There used to be one in a local mall but it got replaced by a jeweler. I'm not kidding. However, anytime I'm traveling, I go to a dollar store, not because I'm "always stressed and always strained," but because it's fun. I was recently driving with my brother and we passed a Family Dollar and I practically ordered him to turn the car around. He reluctantly agreed with only this protest: "You are such a loser."