Tractor Supply Co. (NASDAQ:TSCO) is a rapidly growing specialty retailer operating in the rural farm and ranch realm. As a result, city slickers may not be that familiar with the company or its stores, but they're definitely worth keeping an eye on.

Tractor's recently reported second-quarter results included a sales increase of 16.6%. Same-store sales grew 0.5%, lagging the 5.9% comparable-store sales gains last year's second quarter. Management stated that sales tracked below its expectations because of a slowdown in customer purchases of "big-ticket" items, such as power equipment and generators. However, overall EPS growth was 20.6%, an impressive figure for any company, as is double-digit sales growth.

Going forward, Tractor projects continued sales weakness but still expects overall sales to grow 13.2%-15.1% for fiscal 2006, and for same-store sales growth of 2%-3%.The company is pegging earnings at $2.32-$2.39, for a forward P/E of about 19. That valuation may be a bit pricey for a retailer, but the company has a solid track record.

Tractor's fast growth is visible through in pace of its new store openings, projected at 78-80 for fiscal 2006. With 46 stores opened already this year, total store count is 641, so the company is adding stores at a 10%-15% annual clip. It's important to note is that Tractor's business is quite seasonal, with higher sales coming during the second and fourth quarters and the lowest levels seen during the first quarter. As such, growth is high but can fluctuate because of seasonal issues, such as planting and harvesting seasons.

From a historical perspective, overall sales have grown in excess of 20% annually over the past five years, while earnings have grown nearly 35% per year over this same time frame, suggesting that management is able to leverage sales growth into higher net income levels. Profit margins are low, but Tractor focuses on selling brand-name merchandise to drive inventory turnover and keep product demand high.

Overall, Tractor reports solid return on capital numbers when considering net income as the numerator in the equation. Free cash flow levels are minimal, since the company is a rapid grower, as I referenced above. But Tractor has minimal debt, so it's able to grow mostly from internally generated cash flow. That's always a positive, since it leaves the company less dependent on the capital markets for growth funding.

Tractor is avoid the competitive reach of big-box retailers such as Home Depot (NYSE:HD) or Lowe's (NYSE:LOW) because it chooses to do business in smaller towns where it would be less economical for a larger firm to operate. It also stocks a wide array of inventory, or stock-keeping units (SKU) in retail jargon, with a product focus on farmers, ranchers, and others who embrace a more rural lifestyle. This rural niche is also similar to other retailers, such as Casey's General Stores (NASDAQ:CASY), which operates in the rural Midwest, Applebee's (NASDAQ:APPB), which opens stores in smaller communities, or even financial-services firm Waddell & Reed (NYSE:WDR), which emphasizes marketing its services to rural communities.

Overall, if you're interested in a fast-growing retailer to add to your portfolio, Tractor Supply is one of the top companies to consider. For some reason -- perhaps because of lower liquidity -- the stock's price tends to swing widely, so there are occasional opportunities to catch it at 30% or more off its highs. At a recent $45.60, Tractor Supply is currently trading 32% below its 52-week high, just reached back in April.

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Fool contributor Ryan Fuhrmann is long shares of Home Depot but has no financial interest in any other company mentioned. The Fool has an ironclad disclosure policy. Feel free to email Ryan with feedback or to discuss any companies mentioned further.