Wednesday, April 15, 2015

Bargain Hunting with Ross Stores, Inc.

I'm always on the lookout for excellent companies with a long growth trends in front of them. Ross Stores, Inc. (NASDAQ:ROST) fits that bill but are the shares currently priced for perfection? Ross Stores is a discount retailer that offers consumers discounts off department store prices. Ross Stores is a dividend contender with 20 consecutive years of dividend growth with a 10-year growth rate of 23.9% per year. ROST closed trading on Tuesday, April 14th at $103.80 with a current yield of 0.91%.

The following tables/graphs are from my personal stock analysis spreadsheet. Data for the stock analysis was acquired from Ross Stores, Inc.'s investor relations page, Morningstar, and Yahoo Finance.

Historic Growth Rates:

Historically, owners of Ross Stores, Inc. have done very well. According to longrundata.com, ROST has rewarded investors with a total return of 806% or 23.2% annualized over the last 10 years. Looking at the historic growth rates for per share dividends, earnings, revenue, and free cash flow paints a solid historical basis.

You can read the full analysis of Ross Stores, Inc. over at Seeking Alpha.

8 comments:

  1. PIP,
    I don't have any Ross Stores around my area but I am guessing they are similar to Kohls. Even though the current dividend is low, the growth seems insane for the past 10 years.

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    1. Mongrel,

      The fact that there aren't any in your area bodes well for expansion there at some point. The low yield is really the only downside to this excellent company and at some point they'll probably find their way into my portfolio. The company is too awesome to not have it, especially if you have a long time horizon.

      Thanks for stopping by!

      Delete
  2. Ok that is crazy but I was about to post an analysis of ROST as well. Are we all dividend investors wired in a way that we think similar things these days :-)

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    1. DGI,

      I absolutely love this company from an operational standpoint and there's still plenty more room for store count to increase. They are conservatively opening stores in new markets and then developing those markets and I like that approach.

      It's funny how that seems to happen. Looking forward to your take on the company.

      Thanks for stopping by!

      Delete
  3. JC,

    Using David Fish's website to sort for new potential investments ROST has come up on my radar but I never did any further research. Taking a quick glance at there stats on gurufocus.com and I am thoroughly impressed! Thanks for the write-up, its caused me to do some needed research on the company!

    Keep up the great work!

    Cheers,
    Dividend Odyssey

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    1. Odyssey,

      ROST looks absolutely excellent from a growth perspective and they still have plenty of room for growth moving forward. One of the things I like best about them is that they are fairly recession resistant as well because more people will "trade down" to their stores to get discounted clothing if the economy tanks. Some customers won't stick but I bet a good portion of them do which leads to continued growth in the future.

      Thanks for stopping by!

      Delete
  4. PIP,

    It seems like you found a gem in Ross. The 23.9% growth per year is really impressive, and I'm sure its been great to ride that wave. When do you think its a good price to jump into the stock? Do you plan on buying more? I'm trying to learn when to find the best deals based on the company's performance.

    Thanks, and looking forward to reading more!

    D2R

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    1. debt2retirement,

      ROST looks excellent from my perspective and I like their expansion plans. Penetrate slowly into new markets then develop those markets with further store count increases. Then move on to other new markets. Personally I'd probably buy shares in the low $90's if it gets there. That'd still be expensive but ROST would be able to grow out of it rather quickly. There is an upcoming 2:1 split that should be coming up soon on 4/22 as well.

      Thanks for stopping by!

      Delete