ROST I was asked to comment on our old friend and the
first stock we discussed on this forum many post ago. ROST
This stock is once again about to split 2-1 on Sept. 22,
and the record date is Sept. 7, 1999. So, you must own ROST
by the end of Sept. 7, 1999. At the same time, ROST will pay
an additional .06 1/2 cents/share as a dividend for holders
as of Sept. 7 and payable on October 4, 1999. Well, we have
the same situation as our first encounter with ROST. ROST
was very profitable for all of us if you remember.
TECHNICALS
The weekly profile indicates ROST was hit with some profit
taking once it reached the recent 52-week high. Now, ROST
has reached the first bottom price support level around the
$40 level and today the stock is up with the rest of the
market and the trading volume should surpass the avg. of
308,935 by 100,000. Not what you may call a bottom yet. ROST
may very well move sideways from here. The upper and lower
BBs are forming a divergence and that should level off soon.
Stocastics is just about ready to go positive. So, that is
an early clue. OBV is at a gradual downward slope and about
to go neutral. Another good clue of continued upward prices.
After the split, a $20 to $22 stock price will attract more
people.
iqc.com
FUNDAMENTALS
I'm amazed how good a value ROST remains despite a 15%+
growth rate and with quarter after quarter of surprise
ongoing positive earnings for this year at $3.32, it does
not make sense why ROST could not be priced at 20 P/E x
$3.32= $66.40 not including the dividends. This is a safe
no brainer medium risk CC workhorse and long term hold in
my opinion. A P/E of 12.4! Folks, this is steal in the
stock market today. CHEAP!
NASDAQ: (ROST : $41 1/2) $1,977 million Market Cap at
September 3, 1999 Ranks 547th in the Fortune 1,000 on
Revenue & 527th on Profit. Employs 20,100. Trades at a 45%
Discount PE Multiple of 12.4 X, vs. the 22.4 X average
multiple at which the Discount & Variety Stores SubIndustry
is priced.
Walk into any ROST store and you will always see the middle
working class people spending their money in masses. They
don't go to SAKs or Bloomies. Hey, that's fine with me!
WINs Approach for ROST
The RSI for ROST is just about as low as you can get for
ROST. Meaning? ROST is in an oversold condition right now!
So, you are pretty much at the bottom price level before
the split. Buy into ROST two ways.
1. If you have the cash, buy into ROST by Sept. 7, and hold
until right before the dividend payout date of Oct. 4, 1999.
You should notice a drop in the stock price around that
date. You may want to CC right before that OCT. 4, 1990
event. You will determine the strike price and month at that
point.
2. Buy the ROST OCT. 40s @ 3 1/4 and either exercise and
follow the above steps or cash out long CALLS sideshows for
a profit.
That's about it! |
