Ross Stores Stock the "Best Way" to Play Retail Sector

Analysts and options traders were already quite bullish on ROST

Deputy Editor
Oct 25, 2022 at 10:41 AM
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Shares of Ross Stores, Inc. (NASDAQ:ROST) are up 4.4% to trade at $91.00 this morning, after Wells Fargo upgraded the discount retailer to "overweight" from "equal weight." The analyst in coverage called ROST one of the "best ways" to enter the off-price retail trade. Additionally, Morgan Stanley issued a price-target hike to $119 and kept its "overweight" rating, suggesting full-year 2023 earnings opportunities are being underestimated.  

On the charts, ROST is set to clear its 200-day moving average on a closing basis for only third time in 2022. Despite today's gains and a 16% rally in the last three months, the shares remain down 20% year-to-date. 

Options traders remain bullish on ROST, per the stock's 10-day call/put volume ratio of 3.18 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 96% of readings from the past year. This suggests calls are outpacing puts on an overall basis and have rarely been picked up at a faster rate than in the previous 12 months.

Ross Stores stock's Schaeffer's Volatility Scorecard (SVS) ranks at a relatively elevated 76 out of 100. This means the equity has exceeded option traders' volatility expectations during the last year, making now an intriguing time to speculate with options.


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