Everyone is looking for a bargain

Consumers want low consumer prices and fresh produce, and 99 Cents Only Stores has them both.

By Jim Van Meerten Jul 19, 2010 10:55AM
I try not to fall in love with a stock, but this one keeps coming up on my radar. 99 Cents Only Stores (NDN) is a deep-discount retailer of name-brand, consumable general merchandise. The company's stores offer a wide assortment of regularly available consumer goods as well as a broad variety of top-quality closeout merchandise.
 
They provide customers significant value on their everyday household needs and a shopping experience in customer-service-oriented stores that are attractively merchandised, brightly lit and well-maintained.

Lately the company has been able to increase prices, lower inventory shrinkage (shoplifting) and get a handle on SG&A expenses. It tries to lead the market in having lower fresh-produce prices than the nearby general grocery stores. Low prices and fresh produce seem to be a winning combination.

Last month the stock price appreciated 14.81% and on its way up hit 11 new highs in the past 20 trading session. Barchart rates it an 80% short term technical buy and Barchart's Trend Spotter (tm) also signals a buy. The stock trades around 16.16 with a 50 day moving average of 14.74.
Wall Street brokerage analysts like the company's prospects and estimate the sales will increase by 5.80% this year and 6.70% next year. Any time I see double digit earnings growth projected I take notice. Analysts think EPS will increase 16.10% this year, 12.90% next year and continue for an annual 5 year compounded growth rate of 15.50%.

Investors are starting to notice NDN and on Motley Fool vote that the stock will beat the market with a vote of 173 to 50 with the more experienced All Stars in agreement 52 to 12. Of the Wall Street columnists Fool monitors articles have been favorable 5 to 1.

99 Cent Only Stores might be a nice addition to your portfolio if you like:
  • Recent price appreciation of 14.81% last month
  • 80% Barchart short term technical buy signal
  • Wall Street analysts estimating increases in sales and double digit EPS growth
  • Solid investor sentiment that the stock will beat the market

Jim Van Meerten is an investor who writes on investing here and on Barchart Portfolio Blogs. Please leave a comment below or email JimVanMeerten@gmail.com.

 

Disclosure: No positions in the stock mentioned at the time of publication

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