Buy Those Designer Clothes Cheap And Make Money While Doing it
Ross Stores, Inc. [NASDAQ: ROST] operates a chain of off-price retail apparel and home accessories stores that target value-conscious consumers between the ages of 25 and 54, primarily in middle-income households. The Company offers brand name and designer merchandise at low prices, generally 20% to 60% below regular prices of most department and specialty stores. The company has more than 500 stores in 23 states, with 55 new stores opening last year. Ross Stores' growth has been so notable that it was recently added to the Nasdaq-100. It ha sgrown earnings and revenues at a rate of 11% and 12% respectively for the past 3 years. It spots a TTM Return on Equity of 34% and has enough cash to pay its debt--$102 million in cash. It's debt it minute (4% LTD to Capital ratio), and though its profit margin of 5.6% is not the size I like for small companies, it's still much better than most of its peers.
At its current price of $34.27, it sells for less than 40% discount to its value based on a FCF of $144,297,000 and a deffered long term debt of $48,682,000.
I estimate in can grow 13% in the next 5 years and 10% in year 6-10, with a terminal growth rate of 5% and a discount rate of 11%. That puts its value at about $53.
That's a buy in my book. It also spots a low P.E of 14.48, lower than most of its peers and a P/S ratio less than 1.
With that, you can get your clothes from Ross, and put the savings into buying Ross shares. Both ways, you stand to gain.
sheguno@yahoo.com
Insights
Ross Stores, Inc. [NASDAQ: ROST] operates a chain of off-price retail apparel and home accessories stores that target value-conscious consumers between the ages of 25 and 54, primarily in middle-income households. The Company offers brand name and designer merchandise at low prices, generally 20% to 60% below regular prices of most department and specialty stores. The company has more than 500 stores in 23 states, with 55 new stores opening last year. Ross Stores' growth has been so notable that it was recently added to the Nasdaq-100. It ha sgrown earnings and revenues at a rate of 11% and 12% respectively for the past 3 years. It spots a TTM Return on Equity of 34% and has enough cash to pay its debt--$102 million in cash. It's debt it minute (4% LTD to Capital ratio), and though its profit margin of 5.6% is not the size I like for small companies, it's still much better than most of its peers.
At its current price of $34.27, it sells for less than 40% discount to its value based on a FCF of $144,297,000 and a deffered long term debt of $48,682,000.
I estimate in can grow 13% in the next 5 years and 10% in year 6-10, with a terminal growth rate of 5% and a discount rate of 11%. That puts its value at about $53.
That's a buy in my book. It also spots a low P.E of 14.48, lower than most of its peers and a P/S ratio less than 1.
With that, you can get your clothes from Ross, and put the savings into buying Ross shares. Both ways, you stand to gain.
sheguno@yahoo.com
Insights
posted by Shegun at
1:57 PM
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