Ross Stores (ROST): Shares cycle through positive trading channel

Filed under: Earnings reports, Analyst upgrades and downgrades, Target Corp. (TGT), Kohl's Corp (KSS), Technical Analysis, Stocks to Buy

Ross Stores (NASDAQ: ROST) is a leading U.S. off-price retailer of name brand apparel, accessories, footwear and home fashions. The firm operates 888 Ross Dress for Less stores and 55 dd's Discounts locations, in 27 states and Guam. Target (NYSE: TGT) and Kohl's (NYSE: KSS) are major competitors.

The company pleased investors late last month, when it reported Q2 EPS of 54 cents and revenues of $1.64 billion. Analysts had been expecting 54 cents and $1.61 billion. Management also guided Q3 EPS to 42-44 cents (43 cent consensus) and Q4 EPS to 78-81 cents (80 cent consensus). CL King subsequently reiterated its "strong buy" rating on the shares and the firm was able to report August same store sales that topped the Wall Street view.

The news kept ROST shares cycling through a positive eleven-week trading channel. The price is currently consolidating near the base of that channel, where oversold Stochastic, CCI, MACD and Momentum technical parameters suggest the potential for a rise back toward the top. The close correspondence of the stock's 90-day moving average to the channel base backs the rebound notion.

Altogether, brokers now recommend the issue with two "strong buys", four "buys" and seven "holds". Analysts see a 15% average annual growth rate, through the next five years. The stock's P/E ratio (17.96), PEG ratio (1.12), Price to Sales ratio (0.82), Price to Free Cash Flow ratio (14.20), Sales Growth rate (13.55%), EPS Growth rate (45.95%), Return on Assets (12.38%), Return on Investment (21.40%) and Return on Equity (30.25%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 96% 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 $41.56. A stop-loss of $33.50 looks good here.

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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