Shares of Ross Stores, Inc. (NASDAQ:ROST) closed out 2017 with a bang, surging 22.3% year-over-year and hitting a record high of $81.48 on Friday, Dec. 29. The retail stock is continuing this momentum into the new year -- last seen trading up 0.7% at $80.80, after Citigroup raised its price target to $85 from $72 and Nomura said the company will be one of the biggest beneficiaries of the GOP tax overhaul. And if past is precedent, ROST could be carving out new highs by the time the month is up.
According to data from Schaeffer's Senior Quantitative Analyst Rocky White, Ross Stores has been one of the best stocks to own on the S&P 500 Index (SPX) during the month of January. Over the past 10 years, the security has averaged a monthly gain of 3.41%, and has turned in a positive performance 70% of the time. Another move of this magnitude would put ROST stock near $83.55, based on its current perch.
Options traders would certainly welcome seasonal tailwinds. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), ROST's top-heavy 10-day call/put volume ratio of 12.46 ranks higher than 96% of all comparable readings taken in the past year, meaning calls have been bought to open over puts at a faster-than-usual clip.
Most of the action in this two-week time span was centered at the January 2018 80-strike call, and data from Trade-Alert points to significant buy-to-open activity. If this is the case, call buyers expect ROST to extend its run north of the round $80 mark through front-month options expiration at the close on Friday, Jan. 19.
The outperforming retail name could certainly stand to benefit from additional bullish brokerage notes. Of the 19 analysts covering ROST shares, seven still maintain a tepid "hold" rating. Plus, the average 12-month price target of $76.26 sits at a discount to Ross Stores' current price.