Van Meerten's picks

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 first-quality, close-out merchandise. They provide customers significant value on their everyday household needs and an shopping experience in customer-service-oriented stores which are attractively merchandised, brightly lit and well-maintained. Lately the company has been able to increase prices, lower inventory shrinkage ( shop lifting ) and get a handle on SG&A expenses. They try to lead the market is having lower fresh produce prices than the nearby general grocery stores. Low prices and fresh produce seems to be a winning combination.

Last month the stock price appreciated 14.81% and on its way up hit 11 new highs in the last 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

Comments: View Comments |  Monday July 19, 2010