Option Trade 
Ross Stores, Inc. (NASDAQ:ROST) Calls 
Tuesday, March 01, 2016

**OPTION TRADE: Buy the ROST May 2016 55.000 call (ROST160520C00055000) at approximately $3.60. Place a pre-determined sell at $7.20.

Note: No protective stop losses added -- but if you wish to do so make it $1.45.

by Ian Harvey

March 01, 2016

Ross Stores, Inc. (NASDAQ: ROST), one of the major off-price retailers of apparel and home accessories, is scheduled to report its fourth-quarter results after the market closes today, March 1st. Analysts forecast quarterly earnings of $0.64 per share, up from $0.60 during the same period last year.

Ross Stores has trended sharply higher since the latter part of 2015, and shares are currently trading just shy of their 52-week high. Along the way the company has managed to post stronger than expected results, with a streak of consensus-topping earnings dating back to the company's second quarter 2014.

The company has been growing earnings nicely, with analysts expecting 12.2% earnings growth this year, and 10% next year.

The company has limited international exposure, which should help it, given the current global economic landscape. Looking ahead there is still a lot of room for the company to grow within the U.S., with the majority of its locations being in southern states. The retail sector in general has held up pretty well in the rocky market, but if economic conditions do weaken in the U.S., and recession fears start to grow, traders will likely favor the discount retailers, which is why Ross Stores is one of the top picks among the retailers. As well, low gas prices should result in another solid quarter for Ross Stores.

The stock has been trending higher since last summer, and shares are currently up 4.1% on the year.

Shares of Ross Stores, Inc. will open at $54.98 on Tuesday. The company has a 50-day moving average of $54.29 and a 200-day moving average of $51.71. Ross Stores, Inc. has a 52-week low of $43.47 and a 52-week high of $57.19. The stock has a market capitalization of $22.27 billion and a price-to-earnings ratio of 22.44.

Seven Bridges Advisors LLC bought a new position in shares of Ross Stores, Inc. during the fourth quarter. The fund bought 29,031 shares of the apparel retailer’s stock, valued at approximately $1,562,000. Ross Stores comprises 1.6% of Seven Bridges Advisors LLC’s holdings, making the stock its 15th largest position.

A number of other large investors also recently made changes to their positions in ROST, such as:-

• Capital Planning Advisors LLC raised its stake in shares of Ross Stores by 6.1% in the fourth quarter.
• Carlton Hofferkamp & Jenks Wealth Management LLC bought a new stake in shares of Ross Stores during the fourth quarter worth $759,000.
• Livforsakringsbolaget Skandia Omsesidigt raised its stake in shares of Ross Stores by 42.3% in the fourth quarter.
• Somerset Trust Co raised its stake in shares of Ross Stores by 0.5% in the fourth quarter. Somerset Trust Co now owns 25,570 shares of the apparel retailer’s stock worth $1,376,000 after buying an additional 119 shares in the last quarter.
• Finally, Oakwood Capital Management LLC CA raised its stake in shares of Ross Stores by 1.0% in the fourth quarter. Oakwood Capital Management LLC CA now owns 135,024 shares of the apparel retailer’s stock worth $7,266,000 after buying an additional 1,400 shares in the last quarter.

Also, several equities research analysts have recently commented on the company.

• SunTrust upped their price objective on Ross Stores from $59.00 to $67.00 and gave the stock a “buy” rating in a research note on Monday.

• BB&T Corp. restated a “buy” rating on shares of Ross Stores in a research note on Tuesday, February 2nd. Wolfe Research assumed coverage on Ross Stores in a research note on Tuesday, February 2nd. They issued an “outperform” rating and a $62.00 price objective for the company.

• Goldman Sachs upped their price objective on Ross Stores from $60.00 to $61.00 in a research note on Thursday, January 21st.

• Finally, Cowen and Company upgraded Ross Stores from a “market perform” rating to an “outperform” rating and upped their price objective for the stock from $55.00 to $63.00 in a research note on Monday, December 21st.

Ten analysts have rated the stock with a hold rating and twelve have given a buy rating to the company. The company has a consensus rating of “Buy” and a consensus target price of $68.24.


Harvey’s Options Volatility Indicator

Conclusion

Ross Stores is gaining on the back of favorable response from value-focused customers toward its extensive collection of brand bargains and efficient cost controls. With its strategy of providing customers with attractive bargains and an off-price business model, Ross Stores remains well positioned to exploit opportunities amid all climates.

Therefore, based on the facts above, and Harvey’s Options Volatility Indicator, the following option trade is recommended…..

**OPTION TRADE: Buy the ROST May 2016 55.000 call (ROST160520C00055000) at approximately $3.60. Place a pre-determined sell at $7.20.

Note: No protective stop losses added -- but if you wish to do so make it $1.45.

”Success is simple. Do what's right, the right way, at the right time.”

Option Tip for your Success!
Options traders are not successful because they win.
Options traders win because they are successful.



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