Willow Farm on Ross Stores: “A Retailer With 25% Upside”

Here’s a look at Ross Stores (ROST) by RJ Rhodes at Willow Farm Investments.

Ross Stores is an excellent business with high returns. The stock price has undergone a periodic retreat, producing a valuation that is at worst fair but, more likely, compelling in a market where visible growth is scarce.

Ross has a 10-year runway for unit growth in store base before reaching final maturity, with a differentiated business model totally unlike the mall-based department stores. No doubt this selloff in the stock, while not on the same magnitude as the implosion in Macy’s (M), et al., is driven by some of the same psychology, e.g. fear of disintermediation by Amazon.com (AMZN). I believe the Ross moat, even though not bulletproof, is unique enough to enable continued success. I recommend the stock for purchase with a two-year horizon and potential appreciation to the low $70s.

Check out the whole thing.

Posted by on July 7th, 2017 at 11:17 am


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