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Ross Stores (NASDAQ: ROST) is a leading U.S. off-price retailer of name brand apparel, accessories, footwear and home fashions. The firm operates 841 Ross Dress for Less stores and 52 dd's Discounts locations, in 27 states and Guam. Target (NYSE: TGT) and Kohl's (NYSE: KSS) are major competitors.
The company pleased investors earlier in the month when it announced a December same-store sales gain of 3% (year over year). Analysts had been looking for a 1% improvement. Management also said it expected fourth-quarter EPS of 68-69 cents, versus the average Street estimate of 66 cents. The CEO attributed success to solid performances in the outerwear, dress and shoe businesses. The stock popped into a bullish "flag" consolidation pattern on the news. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the issue with three "strong buys," two "buys" and 10 "holds." Analysts see a 15% average annual growth rate through the next five years. The stock's P/E ratio (13.39), PEG ratio (0.90), Price to Sales ratio (0.57), Price to Book ratio (3.64), Price to Cash Flow ratio (8.98), EPS Growth rate (16.13%), Return on Assets (11.60%), Return on Investment (21.50%) and Return on Equity (29.02%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 94% of the outstanding shares. The stock is one of those used to calculate the S&P 400 MidCap Index. Over the past 52 weeks, it has traded between $21.23 and $35.17. A stop-loss of $21.10 looks good here. Note that the company expects to report January 2008 sales results on February 7th.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.
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