For Growth, Cramer Suggests Ross Stores' Stock

"Mad Money" host Jim Cramer on Wednesday added Ross Stores to his "Ultimate Growth Portfolio for 2012."

The Pleasanton, Calif.-based company operates off-price retail apparel and home fashion stores under the Ross Dress for Less and dd's Discounts brand names. It has more than a thousand locations throughout the United States. Like the other secular growth stocks he's recommended, Cramer thinks Ross Stores' story is far from over. He outlined a checklist of ten reasons why he thinks ROST has lots of growth potential and upside to come.

1. Clear Growth Path: Ross Stores has been posting terrific numbers lately, Cramer said. In March, it delivered a 10 percent increase in same-store sales, which is roughly double of what analysts had expected. It also plans to double its store count by opening another 1,000 locations in the foreseen future.

2. Market For Products: The end market is certainly big enough, Cramer said. Off-price retail was one of the best performing segments of the retail sector last year, he noted.

3. Competition: Cramer thinks this retailer can remain competitive it's really in a two-horse race with TJX, which operates off-price retailers the TJ Maxx and Marshall's brands.

4. Capital To Shareholders: Ross has a great track record of raising its dividend, Cramer said. In February, it upped its dividend by 27 percent.

5. International Expansion: Cramer said Ross is purely a "domestic story" right now because there is still a lot of room to grow in the United States.

6. Balance Sheet Strength: Ross' balance sheet boasts a lot of cash and little debt, Cramer said.

7. Is It Expensive?: Ross currently sells for 15.6 times next year's earnings with a 13 percent growth rate, which Cramer thinks is "pretty darned cheap."

8. Strong Management: Cramer praised the company's current management team, especially CEO Michael Balmuth.

9. Secular Growth: As an off-price retailer, Ross is not being held hostage to the economy. In fact, it's actually thriving in this environment because customers are looking for opportunities to save money on quality merchandise.

10. Margin Growth: In the latest quarter, Ross saw its gross margins expand by 10 basis points. Cramer thinks they can keep growing, too.

For those interested in ROST, though, Cramer doesn't recommend buying when it's up. As with all stocks on his list, he wants investors to wait for a pullback.

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