BJ's Wholesale Club, Inc., is engaged in the operation of food and general merchandise warehouse clubs. For the 39 weeks ended 10/28/00, net sales increased 17% to $3.43B. Net income rose 21% to $76.7M. Revenues reflect the opening of new stores, increased comparable store sales and an expansion in the number of gas stations in operation. Earnings also benefitted from the effect of leveraging fixed expenses against higher level of sales.

February 27, 2001

Our continuing search for stocks that are showing strong earnings growth coupled with a solid up trend leads us to offer BJ's Wholesale Club, a discount club retailer. BJ's, based primarily in the eastern U.S., has followed the successful model of Costco (Nasdaq:COST) and Sam's Club. When BJ reports its earnings on March 6th (before the market opens) the company is expected to report profits of $0.75, which would be a healthy increase of $0.12 over the same quarter a year ago. The current share price is likely to entice management to announce a split. The last split was announced in February 1999 when the stock was trading at $43.31. BJ has been in a solid uptrend since November and today the stock established another all-time high. If the stock can climb above this new high of $46.80 tomorrow on first hour trading volume over 250,000 shares, momentum traders are encouraged to jump on board for a split and/or earnings anticipation run. A new high would also likely result in a buy signal according to the MACD. OBV and Money Flow are as strong. The 20-DMA provided excellent support during the last pullback. This moving average closed today at $44.06. Keep in mind, this will be a short-term play for us.

Picked on February 27th @ $46.49
Change since picked +0.00
Stop Loss @ $44.00

March 4, 2001

We had planned to exit this play at the close on Monday. Unfortunately, the market did not cooperate. The slam-dunk we saw in the early going on Friday drove BJ below our $44.00 stop. Those of you that were not stopped out can be encouraged by the fact that BJ did manage to close only $0.10 below its high print of the day. An earnings and split anticipation run is still possible if the broader market stabilizes Monday. BJ is scheduled to report its quarterly earnings on Tuesday, before the market opens. Consensus expectations are calling for profits of $0.75 a share.

Picked on February 27th @ $46.49
Profit/Loss -2.49 (5%) (Stopped out Friday @ $44.00)
Best Profit +0.44 (0%)