Discount retailer Dollar Tree (DLTR), which sells everything for a dollar or less, reported third-quarter earnings Tuesday morning. The company earned 76 cents per share during the quarter, nearly 62% higher than last year's same-quarter earnings. Sales for the quarter increased by more than 12% to $1.25 billion from $1.11 billion in sales from last year.

Dollar Tree beat the Street's earnings expectation of 66 cents per share by a dime and topped and revenue expectations of $1.24 billion. "I am pleased with our third quarter performance," said CEO Bob Sasser in a statment. "Sales and earnings were above plan." Solid earnings from a company specializing in cheap prices during a recession -- is anyone really surprised?

This morning, discount retailer Big Lots (NYSE: BIG) announced that same-store sales dropped 2.4% during the second quarter. The company's sales were pulled lower by weakness in its home and furniture categories, but still fell in range of its earlier forecast for a decline of 1% to 3%.

While furniture and home acted as an anchor on sales, the company's consumables, hardlines, and seasonal categories performed well. Total retail sales for the quarter fell 2.3% to $1.07 billion while year-to-date same-store sales fell $2.2 billion.

The third quarter was a record quarter for discount retailer Family Dollar (NYSE: FDO). The company reported this morning that net income for the third quarter increased 34.8%, coming in at 62 cents per diluted share.

A year ago, FDO earned 46 cents per diluted share. Net income increased 35.5% to $87.7 million, up from $64.7 million a year ago. Not only were the results better than those from a year ago, but the retailer also topped the consensus estimate of 59 cents per share. Looking ahead, FDO expects to earn between 39 and 43 cents per share in the fourth quarter, compared to expectations of 39 cents per share.

Is it a surprise that this retailer had such a strong quarter? Yes and no. Yes, in term of what the experts on Wall Street believed we would see. No, because FDO is a discount retailer and we are in the midst of one heck of an economic downturn.

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?

Dollar Tree (NASDAQ: DLTR) saw a nice increase in its bottom-line profit. The retailer, which reported earnings for the first quarter earlier this week, said it made 66 cents per share, good for an increase of more than 37%. Revenues increased 14%, and same-store sales went up a whopping 9%. So many retailers would absolutely kill to have that same-store number.

It's no secret why Dollar Tree is thriving. Bad economy plus items-that-sell-for-a-dollar-each equals retail success. Brand equity is important. So is convenience. But a cheap price point oftentimes trumps all.

Early this morning, discount retailer Big Lots (NYSE: BIG) reported first-quarter earnings of 44 cents per share. These results are up from 42 cents a year ago, and are four cents better than the consensus estimate. BIG tallied quarterly sales of $1.14 billion, down from $1.15 billion a year ago. Comparable-store sales slipped 0.5% during the quarter.

BIG forecast second-quarter earnings of 26 to 32 cents per share. On average, analysts expected 30 cents per share. This outlook assumes that BIG's same-store sales will fall 1% to 3% during the quarter.

Shares of discount retailer Ross Stores, Inc. (NASDAQ: ROST) have been soaring today after the company reported strong first quarter numbers, and raised its future guidance.

It is no secret that shoppers are looking for bargain deals these days, and that trend resulted in a 3% jump in same store sales for Ross, and a 15% jump in its first quarter earnings. The company's earnings came in at 72 cents per share, which was in line with analyst estimates, and its revenues were above what Wall Street was looking to see.

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%.

In early 2008, Toby Smith forecast a shift among consumers towards discount retailers; in ChangeWave Investing, he still looks to Wal-Mart (NYSE: WMT) and Fred's (NASDAQ: FRED) as the best way to participate in this ongoing trend.

"Consumers are worried about their jobs and about trying to build savings, so the last thing they are apt to do is spend frivolously.

"Early in 2008, our ChangeWave Alliance accurately picked up a major transformational shift in retailing as consumers began to increase spending at discounters. That shift became even more dramatic, as the economic downturn worsened in Q4 2008.

"Wal-Mart (NYSE: WMT) delivers amid the recent retail meltdown," says Richard Moroney, editior of Dow Theory Forecast, a blue chip service that has been published for over 50 years.

The advisor adds, "The company stands to benefit as cost-conscious shoppers shift away from convenience in favor of value." Here is his review of the stock, which earns his "long-term buy" rating.

"As evidence of strain on the U.S. consumer mounts, Wal-Mart Stores continues to post solid results.The nation's biggest retailer delivered U.S. same-store-sales growth of 2.4% excluding gasoline sales in December, while rival Target (NYSE: TGT) saw same-store sales fall 5% and other discounters and department stores also delivered bad news.

"With decent operating momentum and solid long-term growth prospects, Wal-Mart shares seem reasonably valued at 14 times the consensus profit estimate for the year ending January 2009. Meanwhile, the company is getting bigger and better.

Discount and close-out retailer Big Lots Inc. (NYSE: BIG) posted overall good earnings last week. Income from continuing operations doubled to $29 million, $.26 per share diluted. This is good news. Comparable store sales were up 5% and operating profit nearly doubled from 2% to 3.8%. Net sales increased 3.4% to $1,128.4 million. Net interest income, NOT expense, was $2.9 million for the quarter. Big Lots management has taken the hard decision to close 130 underperforming stores and develop a more economical distribution system.

Senior management at Big Lots is very proactive. The company recently developed a financial supply chain management system to help its vendors gain more efficient access to capital, thus keeping deliveries of merchandise to stores on time and at competitive prices. This financial supply chain management system is directly responsible for better inventory control and, more importantly, much quicker inventory turnover. Cost of sales has dropped and Big Lots has no debt. Total cash and investments increased by $136 million to $210 million. Such improvements in its balance sheet have convinced senior management to buy back up to $600 million of Big Lots stock.

Second quarter guidance forecasts diluted EPS of $.07-$10, double the figure for 2Q 2006. FY 2007 diluted EPS of $1.25-$1.30, an increase of 24-29%, with annual cash flow in excess of $190 million. Big Lots pales in comparison to Target (NYSE: TGT) and Wal-Mart ((NYSE: WMT), but is a much better investment than other much smaller and more limited merchandise closeout chains. The stock began the year trading at $22.84 and closed recently at $31.01, a nice bit of capital appreciation.