Ross Stores Belongs in Growth Portfolio
PLEASANTON, California (TheStreet) -- One of the stocks I've liked for some time is Ross Stores (ROST) - Get Report , which has been in my Van Meerten Growth Model Portfolio for some time. The company seems to be doing everything right including increasing same-store sales, controlling inventory and buying back stock.
The market has noticed, as is evidenced by this one-year price trading chart provided by
:
The price is up a whopping 52% over the past year in a market that is down 8% as measured by the Value Line Index:
Ross operates Ross Dress for Less, the largest off-price apparel and home fashion chain in the United States with 1,037 locations in 29 states, the District of Columbia and Guam. Those stores offer in-season, name brand and designer apparel, accessories, footwear and home fashions at savings of 20% to 60% off department and specialty store regular prices, according to the
Ross Web site.
The Company also operates 88 dd's DISCOUNTS stores in seven states that feature a more moderately-priced assortment of first-quality, in-season, name brand apparel, accessories, footwear and home fashions for the entire family at everyday savings of 20% to 70% off moderate department and discount store regular prices, according to the company Web site.
Factors to consider:
Barchart technical indicators
- 72% Barchart technical "buy" signal
- Trend Spotter "buy" signal
- Above its 20-, 50- and 100-day moving averages
- 5 new highs and up 3.27% in the last month
- Relative Strength Index 58.74%
- Barchart computes a technical support level at 61.53
- Recently traded at 62.47 with a 50 day moving average of 59.99
Fundamental factors
- 19 Wall Street brokerage firms have assigned 27 analysts to monitor the company's numbers
- Sales are predicted to be up 10.5% this year and another 6.8% next year
- Earnings estimates are for an increase of 18.9% this year, an additional 11.5% next year and to continue to increase at an annual rate of 13.42% for at least five years
- These projections resulted in analysts issuing 7 "strong buy", 7 "buy", 12 "hold" and 1 "underperform" ratings their clients
- If the numbers are met investors may expect to see an annual total return of 10% - 12% over the next 5 years
- The P/E ratio of 20.47 is higher than the market P/E of 14.00
- The dividend rate is only .90% but is around 15% of projected sales
- The company has an "A" financial strength rating
- Sames-store sales are increasing at a rate of about 10%
- Plans to add 60 new stores
- The company is still in the middle of a stock repurchase program
Investor interest
- TheStreet Ratings gives the stock an "A+" grade
- Jim Cramer gave a thumbs up the last time he was asked
- Positive comments were made by FBRC Capital, Zacks, UBS and Barclays
Competition
The stock compares favorably to the competition. While Ross was up 52% in the past year,
TJX Companies
(TJX) - Get Report
, owner of T.J. Maxx, Marshalls and other discount chains, was up 54%,
Limited Brands
(LTD)
, owner of Victoria's Secret, Bath and Body Works and other stores, was up 16% and
Gap
(GPS) - Get Report
was up 40%.
TJX
- TheStreet rating : "A+"
- Revenue projections up 8.7% this year and 5.7% next year
- Earnings estimates up 21.6% this year and another 11.6% next year
Limited
- TheStreet rating: "B"
- Revenue projections down 0.4% this year but up 4.0% next year
- Earnings estimates up 8.5% this year and an additional 13.5% next year
Gap
TheStreet rating: "B"
Revenue projections up 5.2% this year and 2.8% next year
Earnings estimated to be up 23.7% this year and an additional 11.4% next year
Summary:
Ross has been in my model growth portfolio for some time. The stock meets the four criteria I look for:
- Increasing revenue
- Increasing earnings
- An "A" financial strength rating
- Recent upward momentum
The best way to play this stock if you own it is to monitor the 50-day moving averages and the lower of the 14 -ay turtle channel to signal possible sell points:
