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  • Ross Stores: Undervalued Despite Strong Growth [View article]
    Bingy77: Agreed. Sometimes I wonder whether analysts feel compelled to downgrade a stock after it has already fallen in price, in an effort to save face.
    Jul 16, 2014. 11:48 AM | Likes Like |Link to Comment
  • Ross Stores: Undervalued Despite Strong Growth [View article]
    Fast Lane: I do not know how low the stock price will go and I am not going to attempt to time the bottom. I think the current valuation is very attractive and offers a nice margin of safety (about 17%).

    The analyst downgrade does not phase me. Margins have been flat or slightly declining over the past few quarters, but they remain near record levels (see the net profit margin graph in my article). As indicated on slide 18 of the company's May 2014 investor presentation, management thinks that margins can be maintained at a similar level to fiscal-year 2013 going forward. I do not have any insights regarding traffic trends, but I suspect that any negative trend is characteristic of the retail sector as a whole and not specific to Ross.

    I view today's drop in the stock price as a buying opportunity. If the stock price does indeed eventually fall below $60, then it becomes an even better bargain, in my opinion.
    Jul 16, 2014. 11:46 AM | Likes Like |Link to Comment
  • Ross Stores: Undervalued Despite Strong Growth [View article]
    EDGI: You're welcome. I think you've established a nice position in the stock.
    Jul 16, 2014. 11:31 AM | Likes Like |Link to Comment
  • Ross Stores: Undervalued Despite Strong Growth [View article]
    Readers: I bought more shares today at $63.68
    Jul 16, 2014. 11:29 AM | 1 Like Like |Link to Comment
  • Ross Stores: Undervalued Despite Strong Growth [View article]
    Joni: Thanks for the feedback. I have considered subscribing to FAST Graphs, but I am disappointed that the basic subscription does not seem to provide any stock screening capabilities, according to the feature list on their website. One of the main issues I face as an investor is finding attractively valued dividend growth stocks, including names that might not currently be on my watch list. Besides sifting through David Fish's Dividend CCC List, I sometimes use screeners at Morningstar, Value Line, and Zacks. That said, FAST Graphs might still be worth a monthly subscription even without screener access.
    Jul 16, 2014. 08:57 AM | Likes Like |Link to Comment
  • Ross Stores: Undervalued Despite Strong Growth [View article]
    Mike: Thanks for your comment -- you bought ROST at a great price. I have shopped at Ross and TJ Maxx in the past and had similar experiences at both stores. (Unfortunately, there is no Ross store where I currently live, but there is a TJ Maxx across town.) I rarely go shopping for clothes, but when I was updating my wardrobe for work last year (before I moved), I found that Ross and TJ Maxx are good places to get nice dress pants at affordable prices (more than 50% cheaper than at department stores such as Macy's).
    Jul 15, 2014. 06:38 PM | Likes Like |Link to Comment
  • Ross Stores: Undervalued Despite Strong Growth [View article]
    Bingy77: Thanks for your comment. In a sense, I suppose I still do have a minimum yield criterion because I will not buy a stock that doesn't pay a dividend. Even though that will undoubtedly keep me away from some good investment opportunities, I think it is important to stay disciplined and consistent with my dividend growth investing strategy. I hope your investment in BBBY turns out well!
    Jul 15, 2014. 06:32 PM | Likes Like |Link to Comment
  • Ross Stores: Undervalued Despite Strong Growth [View article]
    Alex_P: You're welcome. I do not usually write articles about individual stocks, but I had been thinking about writing one about ROST for a while. I suppose your comment on my StockTalk yesterday was the final motivation I needed to sit down and get it done!

    I am glad I abandoned a minimum yield criterion. If I had not, then I would not have invested in stocks such as CMI, CNI, HRL, UNP, and VFC, all of which have turned out to be great dividend growth and total return investments for me. I am confident this will also be the case for ROST in the years to come.
    Jul 15, 2014. 06:30 PM | Likes Like |Link to Comment
  • Ross Stores: Undervalued Despite Strong Growth [View article]
    LonelyInvestor: I do not know when ROST and TJX will break their current down trends, so my approach in such situations is to make purchases at regular intervals and average down my cost basis. As the stock price declines, the margin of safety increases for subsequent purchases.

    Regarding buying habits, I do not think they have changed. On the one hand, an improving economy might lead some consumers to shift away from discount retailers. On the other hand, the middle class continues to shrink and wage increases have been minimal, which will motivate some consumers to search out bargains. Overall, I think economic conditions and consumer preferences will continue to be generally positive for ROST going forward.
    Jul 15, 2014. 06:25 PM | Likes Like |Link to Comment
  • Ross Stores: Undervalued Despite Strong Growth [View article]
    Sum02006: Thanks for your comment. I actually have not seen a recent FAST graph for ROST (I do not subscribe to the service), but it would be interesting to see what its valuation looks like from that perspective, taking into account the company's track record of above-average earnings growth.
    Jul 15, 2014. 06:14 PM | 1 Like Like |Link to Comment
  • Ross Stores: Undervalued Despite Strong Growth [View article]
    ArtC: I have never been particularly good at timing my purchases (or my sales, for that matter). I started the ROST position in my taxable account in March at $72. Subsequent purchases have enabled me to average down to $68.30. I do not mind the stock being in the red in the short term because I am confident I will achieve a good long-term return if I have patience.

    An example of this point is my position in the railroad Norfolk Southern (NYSE:NSC). I aggressively increased my position in the stock in 2012 as its price tumbled during the year. At one point I remember being down 15% (after averaging down a couple of times), but I continued to buy because I was convinced the stock was undervalued. It became the largest position in my portfolio at the time and I waited for Mr. Market to correct the undervaluation. Patience paid off and I now have a 55% unrealized capital gain on my NSC position.
    Jul 15, 2014. 09:29 AM | 3 Likes Like |Link to Comment
  • Ross Stores: Undervalued Despite Strong Growth [View article]
    rosenose: I agree with your positive assessment of VFC. I was fortunate to start a position in VFC back in January 2013, which has resulted in a 73% unrealized capital gain on top of dividends received (my yield on cost is 2.9%). It is a very well-run company and I wish I had purchased more shares when I started my position.
    Jul 15, 2014. 09:21 AM | 1 Like Like |Link to Comment
  • Ross Stores: Undervalued Despite Strong Growth [View article]
    Jasper85: Thanks for your comment. As for why the stock price has been declining in recent months, I think it reflects general weakness in the retail sector. ROST, TJX, Kohl's (NYSE:KSS), Walmart (NYSE:WMT), and Target (NYSE:TGT) are all down year-to-date. Thus, I do not regard the decline as reflecting anything specifically about ROST. With the stock near its 52-week low, I agree that it is a great time to buy.

    Regarding insider sales, I would not make much of them. A general observation is that insiders at many companies sell more often than they buy, and their various reasons for selling are rarely clear. I consider insider buying to be more informative.
    Jul 15, 2014. 09:18 AM | 2 Likes Like |Link to Comment
  • A Real Dividend Growth Machine: Q2 2014 Review [View article]
    hecter427: My brokerage is Scottrade, which charges $7 per transaction. To keep my expense ratio below 0.5%, my minimum transaction size has to be $1,400. Thus far this year, it has averaged nearly $1,800.
    Jul 10, 2014. 12:35 PM | 2 Likes Like |Link to Comment
  • A Real Dividend Growth Machine: Q2 2014 Review [View article]
    Miz: Thank you! I hope my machine continues to perform well in the future.
    Jul 9, 2014. 05:22 PM | 1 Like Like |Link to Comment
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