Ross Stores (ROST) Fell as the Guidance Fell Short of Expectations

TimesSquare Capital Management, an equity investment management company, released its “U.S. Mid Cap Growth Strategy” first quarter 2025 investor letter. A copy of the letter can be downloaded here. At the beginning of 2025, a general sense of optimism prevailed among businesses and markets. The expectations for a pro-business atmosphere with reduced regulatory burdens boosted global markets in January. However, in February, delays and uncertainties surrounding U.S. policies led to a more cautious market response, culminating in a significant decline in March. In this environment, the strategy returned -3.29% (gross) and -3.48% (net) while the Russell Midcap Growth Index returned -7.12%. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its first-quarter 2025 investor letter, TimesSquare Capital U.S. Mid Cap Growth Strategy highlighted stocks such as Ross Stores, Inc. (NASDAQ:ROST). Headquartered in Dublin, California, Ross Stores, Inc. (NASDAQ:ROST) is an off-price fashion and apparel retailer. The one-month return of Ross Stores, Inc. (NASDAQ:ROST) was -15.89%, and its shares lost 13.11% of their value over the last 52 weeks.  On June 18, 2025, Ross Stores, Inc. (NASDAQ:ROST) stock closed at $128.05 per share, with a market capitalization of $41.881 billion.

TimesSquare Capital U.S. Mid Cap Growth Strategy stated the following regarding Ross Stores, Inc. (NASDAQ:ROST) in its Q1 2025 investor letter:

“While recent results were in line with expectations, Ross Stores, Inc. (NASDAQ:ROST) provided forward guidance that was less than anticipated. The operator of discount apparel and home fashion outlets anticipates a slow start to the year attributable in part to the new CEO’s understandable caution amidst present economic conditions. That marked down Ross’s shares by -15%.”

Was Jim Cramer Right About Ross Stores, Inc. (ROST)?

A close-up of a mannequin outfitted with the company’s latest collection of apparel.

Ross Stores, Inc. (NASDAQ:ROST) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 50 hedge fund portfolios held Ross Stores, Inc. (NASDAQ:ROST) at the end of the first quarter, which was 62 in the previous quarter. In the first quarter of 2025, Ross Stores, Inc.’s (NASDAQ:ROST) total sales grew 3% to $5 billion. While we acknowledge the potential of Ross Stores, Inc. (NASDAQ:ROST) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.

In another article, we covered Ross Stores, Inc. (NASDAQ:ROST) and shared the list of stocks Jim Cramer recently discussed. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors. While we acknowledge the potential of ROST as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.