Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, discount retailer Family Dollar Stores (NYSE: FDO) has earned a respected four-star ranking.

With that in mind, let's take a closer look at Family Dollar's business and see what CAPS investors are saying about the stock right now.

Family Dollar facts

Headquarters (Founded)

Matthews, N.C. (1959)

Market Cap

$6.4 billion


General merchandise stores

Trailing-12-Month Revenue

$8.21 billion


Chairman/CEO Howard Levine

President/COO James Kelly

Return on Equity (Average, Past 3 Years)



$437.8 million / $548.5 million

Dividend Yield



99 Cents Only Stores (NYSE: NDN)

Dollar General (NYSE: DG)

Wal-Mart Stores (NYSE: WMT)

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 91% of the 556 members who have rated Family Dollar believe the stock will outperform the S&P 500 going forward. These bulls include robertshrestha and All-Star TMF1000, who is ranked in the top 0.5% of our community.

Just last week, robertshrestha listed several of Family Dollar's positives: "Nice play on continued weakness in economy, strong cash flow, nice returns on capital, solid balance sheet, reasonable price. What's not to like?"

In fact, Family Dollar's three-year average return on equity of 24% tops that of discount retail rivals like 99 Cents Only (8.1%), Dollar General (11.8%), and Wal-Mart (22%).

CAPS All-Star TMF1000 expands on the outperform argument:

The downside is protected by its dividend, growing earnings and the threat of another offer from Trian or someone else.

What I like about Family Dollar store besides its $0.72 dividend is that they will, among other stores, capitalize on the growing trend to help customers by placing many smaller stores closer to customer homes. In world with high and higher gas prices they are likely to continue to climb, this should help them continue to take market share from Wal-Mart. ...

Family Dollar store just reported a quarterly earnings record of $0.98. The P/E ratio is now 18.12. I think this is a good valuation off of a record quarter and a strong trend to capitalize on dollar stores placing stores closer to the customer homes to negate the problems associated with higher gas prices.

What do you think about Family Dollar, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of and creating a diagonal call position in Wal-Mart, and they own shares of Wal-Mart. Try any of our Foolish newsletter services free for 30 days.

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