Though last month was the worst January on record, not much has changed in terms of the market’s overall stance–the bulls are not in control, but the selling pressures, while gradually picking up, are not anywhere as intense as they were most of last fall.  So a potential bottom-building process continues.

And much of the market’s potential leadership remains the same–education, biotech and now some precious metal stocks are hanging in there well.  But instead of harping on another stock from one of those groups, I thought I’d mention a slow, steady grower that’s been acting superbly in recent weeks … and is sitting at a great entry point.

It’s Dollar Tree (DLTR), the discount retailer, which sells a variety of common goods (beauty care, home goods, etc.) for a buck.  Here’s what I wrote about the company in Cabot Top Ten Report back on December 1:

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“Discount retail remains in favor and Dollar Tree is one of the leaders in the group, making its second appearance in Cabot Top Ten Report in the past month. The company operates 3,500 deep-discount stores across the country, selling a bunch of basic consumables (beauty products, candy, decorations, toys and so on) for about a buck each. The overall story might not be sexy, but it’s simple: Consumers, even those with money to spare, are cutting back, with many going to discount locations to pick up necessary items. Dollar Tree’s earnings report last week confirms that trend–revenues rose a solid 12%, while earnings advanced 24%, ahead of estimates and miles ahead of its general retail peers. That pushed the stock toward new-high ground, and led to estimate hikes across the board. It’s not going to be a big winner, but it should do well in this environment.”

Since then the stock has crept higher, but generally has remained in very tight trading range.  I like that the stock popped higher on great volume in mid-January after a fellow discount retailer reported a great quarter.  Now the stock is prepping for a breakout–I think you could buy half your normal position here, keep a tight stop-loss just under 41, and possibly look to average up on a powerful move above 44.

Just be aware that earnings are due out February 25, so if you’re still holding it at that point, and don’t have a profit cushion, you might trim ahead of the report–no use taking a big risk in this environment.  For now, the set-up looks terrific, so if you’re game, pick up a few shares.