Ross Stores, Inc. (NASDAQ:ROST) was among the stocks Jim Cramer discussed during Mad Money, as he highlighted a difficult backdrop for stocks. Cramer discussed the stock during the episode, as he remarked:
Improved marketing brings customers into the stores. Once they’re there, they find better merchandising than they remember and a better in-store experience that converts to better sales, which in turn lets Ross invest more in merchandising, marketing, and fixing up the stores. That’s why I think the stock can keep running. I don’t expect Ross to keep putting up 17% same stores sales. That’s too hard. But I do expect solid results. And as the numbers get better, management can start focusing on expanding their footprint.
The company has just under 2,300 stores between its two brands. Conroy thinks they can have 3600. That’d be big. Valuation-wise, Ross Stores now trades at 29 times this year’s earnings estimates, up from 23 times earnings when Conroy took over. And yes, it’s a bit rich for a retailer on an absolute basis, no doubt about it, but let’s be, why don’t we be a little more, let’s say, comparative. I don’t think it’s that… expensive because TJX sells for like 31 times earnings.
Plus, given the recent track record here, it wouldn’t shock me if Ross keeps beating the numbers, which will make the stock look a lot cheaper in retrospect. Here’s the bottom line: The off-price space is one of the few areas of retail that’s really working here. And while TJX is my long-term favorite, no doubt about it, I gotta say, Jim Conroy is doing, he’s doing an incredible job at Ross Stores, and that stock’s absolutely worth owning. I wish I could own two off-prices because that’s what I’d really like to do. But that seems to be not all that diversified as I tell you to be.
Photo by Nicholas Cappello on Unsplash
Ross Stores, Inc. (NASDAQ:ROST) runs off-price retail chains that provide apparel, accessories, footwear, and home goods. The company targets middle- to moderate-income customers with its brands, including Ross Dress for Less and dd’s DISCOUNTS.
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