Pier 1 and Ross Stores to Open Near 52-Week Highs

While the markets were down overall yesterday, retailers Pier 1 Imports PIR and Ross Stores ROST reached new multiyear highs of $12.99 and $89.25 per share, respectively. Pier 1's share price jumped after the company said in October that it would repurchase up to $100 million in shares. Pier 1 was also a Jim Cramer pick following its solid second-quarter results. The Fort Worth, Tex.-based retailer offers decorative home furnishings and gifts. It has more than 1,000 stores in the U.S., Canada and Mexico. Founded in 1970, Pier 1 now has a market cap of $1.4 billion. The price-to-earnings ratio is lower than the industry average, and the operating margin is higher than the industry average. The long-term EPS growth forecast is 12.5% and the return on equity is 30.3%. Six of 8 analysts consider it a Buy or Strong Buy; none rate it a Sell. The share price is more than 27% higher than a month ago. The stock has outperformed competitors Cost Plus CPWM and Williams-Sonoma WSM over the past six months. Ross Stores announced that it would expand with 15 new stores in Arkansas and Illinois. Jim Cramer recently has called this stock a Buy as well, and there have been takeover rumors about the company. The Pleasanton, Calif.-based company operates more than 1,000 off-price retail apparel and home accessories stores in the United States. Its market cap is $10.1 billion. It was founded in 1957. Earnings per share are anticipated to grow 11.3% over the next five years and the return on equity is 45.1%. Its operating margin is higher than the industry average and it has a dividend yield of 1.0%. The PEG ratio is 1.2. The share price is up more than 11% in the past month, as well as about 49% higher than a year ago. The stock has outperformed competitors TJX Companies TJX and Walmart WMT over the past six months. Action Items: Bullish: Traders interested in retail exchange traded funds might want to consider the following trades:

• SPDR S&P Retail XRT is up more than 9% year to date.
• Consumer Discretionary Select Sector SPDR XLY is up more than 5% year to date.
• Vanguard Consumer Discretionary ETF VCR is up more than 4% year to date.

Bearish: Or traders might want to consider this alternative position:

• ProShares UltraShort Consumer Services SCC, though it is currently trading just above the 52-week low.

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