11 Best Counter Cyclical Stocks to Buy According to Analysts

2. Ross Stores, Inc. (NASDAQ:ROST)

Average Upside Potential: 20.98%

Number of Hedge Fund Holders: 62

​Ross Stores, Inc. (NASDAQ:ROST) operates as an off-price retailer offering discounted apparel and home fashion products. The company runs two primary store brands: Ross Dress for Less, with 1,836 locations across 43 US states, and dd’s DISCOUNTS, which provides a more moderately priced selection. The company’s business model focuses on selling name-brand and designer merchandise at prices 20% to 60% lower than those of traditional department and specialty stores. During economic downturns, ROST’s value-oriented offerings often attract budget-conscious consumers seeking quality products at reduced prices.

Ross Stores, Inc. (NASDAQ:ROST) delivered Q4 sales and earnings results at the high end of expectations, with comparable store sales gaining 3% on top of a 7% gain in the same period last year. For fiscal 2024, earnings per share were $6.32, up from $5.56, while net income rose to $2.1 billion compared to $1.9 billion last year. Total sales for the year increased to $21.1 billion, up from $20.4 billion in the prior year period. However, the company noted that sales trends began softening later in January and into February, attributed to unseasonable weather and heightened volatility in the macroeconomic and geopolitical environment. Despite this volatility, ROST is a notorious outperformer in the broad market during the previous recessions (such as 2008-2009 and 2022), which makes it one of the best counter cyclical stocks to consider.

Looking ahead to fiscal 2025, Ross Stores, Inc. (NASDAQ:ROST) is taking a cautious approach, forecasting same-store sales to be down 1% to up 2%, with EPS projected at $5.95 to $6.55. The company plans to open approximately 90 new locations in 2025, comprised of about 80 Ross and 10 dd’s stores. Despite current challenges, management believes some recent headwinds could be transitory and anticipates that the volatile external environment may result in more opportunities for closeout merchandise, potentially enabling greater values on branded goods in future quarters.