Is ROST a good stock to buy? We came across a bullish thesis on Ross Stores, Inc. on LongYield’s Substack. In this article, we will summarize the bulls’ thesis on ROST. Ross Stores, Inc.’s share was trading at $231.73 as of May 29th. ROST’s trailing and forward P/E were 32.36 and 30.96 respectively according to Yahoo Finance.
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Ross Stores, Inc., together with its subsidiaries, operates off-price retail apparel and home fashion stores under the Ross Dress for Less and dd’s DISCOUNTS brands in the United States. ROST delivered a historic Q1 FY2027, marking a powerful reacceleration in its off-price model with comparable store sales rising 17% and EPS surging 37% to $2.02, significantly ahead of expectations.
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The quarter demonstrated accelerating demand for its treasure-hunt retail format as broad-based customer growth across income groups reinforced structural strength in discretionary spending trade-down toward value-focused retailers.
Margin performance improved with operating margin expanding 120 basis points to 13.4%, driven by merchandise margin gains, occupancy leverage, and disciplined cost absorption. Management raised full-year guidance to $7.50–$7.74 EPS and 6–7% comparable sales growth, reflecting confidence in sustained traffic momentum despite expected moderation from Q1’s exceptional comp base. The company’s tariff-driven inventory overhang in global apparel markets created unusually rich closeout opportunities, reinforcing a structural tailwind for its off-price buying engine and packaway inventory system.
While Q2 guidance implies some deceleration, the market continues to re-rate Ross as a high-quality compounder benefiting from both consumer trade-down and supply chain disruption in favor of off-price retailers. Beyond the core banner, dd’s DISCOUNTS continues to expand rapidly with a planned acceleration in store openings, strengthening exposure to lower-income consumers facing persistent inflation pressure and creating an additional long-term growth vector within the broader Ross portfolio.
Overall, Ross Stores stands out as a structurally advantaged off-price leader, with improving traffic trends, expanding margins, a resilient value proposition, and a favorable macro backdrop, positioning the business for sustained earnings growth and a potential rerating as investors reassess the durability of its earnings power over time.
Previously, we covered a bullish thesis on Target Corporation (TGT) by LongYield in May 2025, which highlighted weak sales trends, omnichannel resilience, and value positioning amid macro headwinds. TGT’s stock price has appreciated by approximately 34.76% since our coverage. LongYield shares a similar view on Ross Stores (ROST) but emphasizes stronger off-price acceleration, tariff-driven tailwinds, and superior margin expansion versus Target’s more muted recovery trajectory in retail.
Ross Stores, Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 83 hedge fund portfolios held ROST at the end of the first quarter which was 71 in the previous quarter. While we acknowledge the risk and potential of ROST as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ROST and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
