Buy Ross Stores Before Earnings?

Posted Mar 16th 2011 10:30AM by Steven Mallas
Filed under: Ross Stores (ROST)

Ross Stores (RST), a retailer whose colleagues include Kohl's (KSS) and Wal-Mart (WMT), is set to report earnings for the fourth quarter on Thursday, March 17. Should investors give this one a look before the release?

Arguably, one probably should. According to Trey Thoelcke's fundamental review of the chain's current status, things appear to be going well. Same-store sales were robust during the month of November, rising 6%; in December, they increased 4%. More recently, comps in February went up a respectable 3%.

From a valuation standpoint, the stock doesn't appear to be too expensive. And from a technical perspective, the situation is even more impressive.

The 52-week low for the shares is $48.71 while the 52-week high is $72.86. Ross Stores closed on Tuesday at a quote of $69.84.

As can be seen, the company isn't far from its 52-week high. Also, the one-year chart is reflective of strength. I look at that graph and have to wonder if the stock is indeed a buy.

There are a couple points to consider in the bear thesis. One: the right side of the chart makes me think that we could be in for some sideways movement. That's not always a bad thing, of course, but if you're searching for a momentum name, you may not get it with this one. Second, the current market volatility brought on by global issues (unrest in Libya, disaster in Japan, etc.) discourages me from wanting to send in an order for any name.

I would not buy Ross Stores this week. Personally, I feel there is simply too much risk. My inclination is to check on this idea the next time it reaches the 52-week high.

Disclosure: I don't own any company mentioned; positions can change without notice.

Tags: earnings, featured, ross stores, rost