Reasons to Be Bullish for Ross Stores

Last month, Barron’s called Ross Stores (ROST) a “unique bargain.” The magazine had more good things to say about the off-price retailer.

The last earnings report wasn’t so hot since Ross is heavily exposed to California and the Golden State’s stricter regulations.

But there is reason for optimism. For one, the stimulus checks will be a big boost for Ross’s core shoppers. Barron’s quotes analyst Paul Trussell:

The desire for refreshed wardrobes when the economy reopens should help Ross, he argues. “In addition, we are bullish on the medium- to longer-term market share potential of the off-price group, and we think Ross will be a key beneficiary of elevated discretionary demand once consumers start spending their record savings accumulated during the pandemic.”

Trussell notes that fellow off-price retailer Burlington Stores (BURL) delivered a strong quarter when it reported in early March, and while TJX Cos. (TJX), like Ross, was more downbeat in its earnings, that company pointed to improving quarter-to-date trends on its call. The success of peers bodes well for Ross, he argues, as California lifts restrictions and more customers are vaccinated.

He thinks that Ross’s next report, due out in May, will be a catalyst for the shares as “the company will beat on both the top- and bottom-line, showcasing the strength and resilience of the off-price model.”

Posted by on March 22nd, 2021 at 12:23 pm


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