BJ's Wholesale Club, Inc., is engaged in the operation of food and general merchandise warehouse clubs. For the FY ended 2/3/01, net sales increased 17% to $4.93B. Net income rose 18% to $131.5M. Revenues reflect the opening of new stores, increased comparable store sales and the expansion in the number of gas stations. Earnings also benefitted from the effects of leveraging fixed expenses against a higher level of revenue.

May 27, 2001

The promise of an improving economy has lit a fire under the retail stocks and BJ has been no exception. The company has employed a solid strategy that has enabled BJ's Wholesale Club to produce excellent profits. The current quarter is expected to net the company $0.49 in profits, which would be a nice increase of seven cents, or 17%, over the same quarter a year ago. Friday's modest rally could have been sparked by the announcement that the company's board has approved an increase of $50 million to the company's current stock repurchase plan. Last week's rally all started when BJ gapped above its 50-DMA of $45.25. This price is now the major support and we have therefore set our initial stop just a little lower at $45.10. BJ closed just below the new all time high of $48.55. This price provides very mild resistance and new positions might initiated when BJ trades above this price, especially if we see first hour trading volume over 200,000 shares. A gap up on Tuesday to over $50.00 may result in a little pullback in the early going. The MACD and Money Flow are both very strong and portend of more gains for the stock. The RSI is approaching an overbought indication but there is still rally room.

Picked on May 27th @ $48.31
Change since picked +0.00
Stop Loss @ $45.10

June 14, 2001

BJ bucked the market and headed higher on Thursday. Not only did it break up through $53, it managed to close above the psychologically important $53-level on good volume of 730,000 shares. Earlier in the day, BJ successfully tested support at $51.70 and bounced higher. At this point, traders who want to hop aboard the wholesaler's train should wait to see if BJ can close above $53 again on Friday. However, don't chase the stock much over $54, should it start to pick up steam, since it is starting to get slightly overbought at current levels. We are giving BJ one more day before we tighten up our stop, so for now our stop remains at $50.00.

Picked on May 27th @ $48.31
Change Since Picked +4.74
Stop Loss @ $50.00

June 12, 2001

On Tuesday, BJ managed to close above resistance at $52 on good volume of 600,000 shares. BJ also successfully tested its 5-dma at $51.56 and bounced higher. Add to this the fact that BJ has only weak resistance at $52.75 to deal with and we think you have the recipe for another run higher in BJ. Of course, Tuesday's upgrade of BJ from a "buy" to a "strong buy" by Lehman Brothers doesn't hurt either. In addition to upgrading the stock, Lehman raised its 12-month price target on the retailer to $62 from $55. Traders that may be thinking about getting into BJ should wait until the stock breaches $52.75 on volume that puts the stock on track to do at least 650,000 shares for the day. We are raising our stop to $50.00 to protect our gains thus far.

Picked on May 27th @ $48.31
Change Since Picked +4.05
Stop Loss @ $50.00

June 10, 2001

On Thursday we spoke of a pullback buying opportunity in BJ and whaddaya know it came to fruition on Friday. We warned of a pullback to $50 and recommended that traders pick up the stock on a bounce off this support level. On Friday, BJ opened at $50 and headed higher throughout the rest of the session. While BJ still has resistance at $52.00 to deal with, it is now looking technically stronger than on Thursday. That said, traders considering opening new positions in BJ should now wait until the stock breaches resistance at $52 before pulling the trigger.

Picked on May 27th @ $48.31
Change Since Picked +2.93
Stop Loss @ $48.75