At a time when much of the retail world is groaning about soft sales and squeezed profits, Merry-Go-Round Enterprises Inc. can't seem to stop catching the brass ring -- and everything else in sight.

Consider the tip-top bottom line for the 20-year-old Maryland-based retailer of young men's and women's apparel, whose profits, revenue, size, sales per store and stock price have been shooting upward since 1987:

Ten years ago, Merry-Go-Round was a small private business that sold $58 million worth of bell-bottoms and other trendy clothes to teenagers from fewer than 200 stores.

Today, the company's shares trade at a premium on the New York Stock Exchange, up 147 percent since the beginning of 1989.

Sales of its moderately priced weathered leather jackets, patterned sweaters, loose-fitting suits and other sportswear -- aimed at fast-shifting teenage fashion trends -- were up 60 percent last year, thanks in part to the acquisition of an ailing retail competitor that helped boost Merry-Go-Round's storefronts past 600 last year.

Profits from the sales nearly doubled, rising from $11 million to more than $22 million over the year. And the momentum is not slowing in 1990, exceeding even the rosiest expectations of retail analysts.

Yesterday, Merry-Go-Round reported that, after paying its first dividend (2 1/2 cents per share) in May, first-quarter profits were 297 percent higher than the same quarter a year ago, $6.62 million (30 cents) compared with $1.66 million (8 cents) last year.

Revenues rose 64 percent to $120.97 million during the quarter, from $73.91 million in the year-ago period. Sales at stores Merry-Go-Round owned a year ago were up 42 percent, the most revealing indication of its prosperity.

Merry-Go-Round's stock closed up 50 cents at $26.50 yesterday.

All this is making Merry-Go-Round the hottest retail company in the country, according to industry analysts, who are beginning to place it in the same rarefied league with The Gap and The Limited, two phenomenally successful national specialty chains.

"The song says 'when you're hot, you're hot, but when you're not, you're not,' " said Michael D. Sullivan, Merry-Go-Round chairman and chief executive.

"We are thrilled with all this attention and success, but we think we have been doing great business for two decades and now everyone is recognizing it. We have worked hard."

Very hard, considering the niche Merry-Go-Round occupies with its many stores -- which operate under the names Merry-Go-Round, DeJaiz, Attivo, Cignal and others -- in 37 states, including nearly three dozen stores in the Washington area.

If fashion is fickle, then youth fashion is the ficklest, as trends among teenagers switch quicker than the time it takes to change a sweater.

"It can be a flaky business, and though a company is hot as a pistol right now, it can get cold just as fast," said Fred Wintzer, a market analyst at Alex. Brown & Sons in Baltimore.

But Merry-Go-Round "stayed in their niche, while others were leaving it in the soft times, and now it is paying off," he said.

And the payoff might get bigger. Merry-Go-Round is now sitting on $40 million in cash and wants to keep growing, with plans to open 50 to 60 new stores every year.

Such lofty dreams were far away when Merry-Go-Round was born in the late 1960s as a unisex boutique amid the counterculture movement. But even then it traded on trends and focused on the youth that snapped up its embroidered vests.

The business grew respectably and was fueled by a boom in mall-based specialty apparel stores.

But it was when the Joppa-based chain focused on young men's fashions, which account for 65 percent of total sales, that it really took off.

"Everybody left the field to focus on women, de-emphasizing the teenage end of business, because the demographic numbers were declining," said Alex. Brown's Wintzer.

"They {Merry-Go-Round} were the ones that did a good job in young men's fashions and now they find themselves without much competition," he said.

A $24 million headquarters building opened in early 1989 on a 44-acre site in Harford County that also includes a 360,000-square-foot warehouse and distribution center, permitting its supply operations to grow as the stores multiply. The facility can process 70 truckloads of merchandise a day, servicing 1000 stores.

But could all of it spin out of control -- a fate suffered by other shooting stars of retail?

"When you are in this kind of position, you do get more aggressive, and if you are right, you tend to do even better than you expected," said Sullivan.

"But the risks have to be calculated and taken with great caution," he said.