1. Consumer Discretionary Sector Stocks February 23 rd, 2010 Sekhar Achanta,Tongyu Zhou

2. S & P 500 Sector Weights (as of 2/21/2010) SectorCurrent Index Weight Current SIM Weight Consumer Staples 11.60%11.66% Energy 11.33%11.90% Financials 15.70%11.37% Health Care 12.65%14.30% Industrials 10.26%12.36% Information Technology 18.84%19.04% Materials 3.49%3.46% Telecommunication Services 2.84%3.27% Utilities 3.58%2.94%

3. Sector Performance YTD and QTD (2/21/2010)

4. Sector Recommendation Buy 200 basis points of Consumer Discretionary stocks. Current holdings are Best Buy, GameStop and Comcast. Buy 100 basis points of Target Corporation (TGT). Buy 50 basis points of Ross Stores (ROST). Buy 50 basis points of Royal Caribbean Cruises (RCL).

5. Target Stores Target is an upscale discounter Provides high-quality, on-trend merchandise at attractive prices in clean, spacious and guest-friendly stores. In addition, Target operates an online business, Target.com. 1740 Stores in 49 States (including 251 Super Target locations)

6. Target Earnings Growth Rates

7. Target EPS Growth Rates

8. Target Margins

9. Target Corporation Valuation Analysis Relative to IndustryHighLowMedianCurrent P/Trailing E1.2.58.96.95 P/Forward E1.0.56.991.0 P/B1.2.61.0 P/S1.2.71.0 P/CF1.3.51.11.0 Relative to S&P 500HighLowMedianCurrent P/Trailing E1.5.631.1.95 P/Forward E1.3.631.0 P/B1.7.71.21.1 P/S.7.3.5 P/CF1.5.61.1.9

10. Target Corporation Valuation Analysis Absolute Valuation HighLowMedianCurrentTarget Multiple Target E,S,B /Share Target Price P/Forward E27.811.917.814.620$3.10$62.00 P/S1.1.3.8.60.8120.97$96.77 P/B5.81.63.52.43.521.13$73.95 P/EBITDA10.873.578.176.338.178.01$65.44 P/CF17.05.512.69.312.65.45$68.67 Current Share Price : $50.73 Implied equity value/share : $66.92 Upside/(Downside) to DCF : 32.2% Terminal Discount Rate:11.0% Terminal FCF Growth: 5.0%

11. Ross Stores - Profile Ross Stores, Fortune 500 company. Second largest off-price retailer. Revenues of $6.5 billion. Ross Operates –904 Ross Stores and 52 DD’s discounts stores –In 27 states and Guam Offers name brand and designer apparel, accessories, footwear and home fashions at 20-60% discounts.

12. Ross Stores - Same Store Sales and Inventory MeasurePeriod% Change$ Change SalesFour weeks ended January 30, 2010 13% increase$46 million Sales13 weeks ended January 30, 2010 14% increase$245 million Sales52 weeks ended January 30, 2010 11% increase$700 million Inventory13 weeks ended January 30, 2010 11% decrease Sales52 weeks ended January 30, 2010 1% decrease

13. Ross Stores - Stock Repurchase and Dividends Stock Repurchase –Two-year 750 million dollar stock repurchase program. –13 percent of total market value. During fiscal 2009, Ross Stores repurchased –7.4 million shares –300 million dollars. Dividend –Increased by 45 percent –Current Dividend is 16 cents per share. –Current dividend yield is 1.4%. Institutions own 97% of the shares. Debt to Total Capital is 12%.

14. Ross Stores - Forecasts MeasurePeriod% Change SalesYear over Year5% increase Same Store SalesYear over Year2% increase Diluted SharesYear Over Year5% decrease

15. Ross Stores Revenue Growth Rates

16. Ross Stores Earnings Growth Rates

17. Ross Stores Margins

18. Ross Stores Valuation Analysis Relative to IndustryHighLowMedianCurrent P/Trailing E1.5.31.96.87 P/Forward E1.3.31.98.88 P/B2.1.21.41.3 P/S1.7.31.1 P/CF1.8.31.31.1 Relative to S&P 500HighLowMedianCurrent P/Trailing E1.4.28.96.80 P/Forward E1.3.27.96.83 P/B3.111.61.2 P/S1.0.2.6.7 P/CF1.6.41.21.0

19. Ross Stores Valuation Analysis Absolute Valuation HighLowMedianCurrentTarget Multiple Target E,S,B /Share Target Price P/Forward E21.07.015.212.115.2$3.89$59.12 P/S1.4.5.9.8.9$74.09$66.68 P/B6.72.44.94.34.910.95$53.65 P/EBITDA11.593.928.907.518.96.27$55.80 P/CF17.25.712.110.712.14.40$53.24 Current Share Price : $47.1 Implied equity value/share : $87.75 Upside/(Downside) to DCF : 86.1% Terminal Discount Rate = 12.0% Terminal FCF Growth = 5.0%

20. Royal Caribbean Cruise – Profile Royal Caribbean Cruises is a cruise company operating 38 ships. The Company owns five cruise brands –Royal Caribbean International, –Celebrity Cruises, –Pullmantur, –Azamara Cruises, –CDF Croisieres de France. Market Cap -$5.63 billion. Revenues -$6.5 billion. Net Income -$573 million Operating Margin -5.67% LT Debt to Total Capital-51%

21. Royal Caribbean Cruise - Revenues

22. Royal Caribbean Cruise - Earnings

23. Royal Caribbean Cruise - Margins

24. Royal Caribbean Cruise Valuation Analysis Relative to IndustryHighLowMedianCurrent P/Trailing E1.9.36.691.8 P/Forward E1.7.46.73.67 P/B.8.2.5.3 P/S1.2.5.9 P/CF1.0.2.6.7 Relative to S&P 500HighLowMedianCurrent P/Trailing E1.8.2.831.7 P/Forward E1.5.33.87.99 P/B.8.1.4.3 P/S1.7.31.0.8 P/CF1.3.2.7

25. Royal Caribbean Cruise Valuation Analysis Absolute Valuation HighLowMedianCurrentTarget Multiple Target E,S,B /Share Target Price P/Forward E37.74.014.214.515.01.81$27.15 P/S3.1.21.51.01.538.14$57.21 P/B2.9.21.3.81.332.87$42.73 P/EBITDA12.12.95.635.45.634.87$27.47 P/CF15.11.27.77.683.46$27.68 Current Share Price : $26.3 Implied equity value/share : $35.37 Upside/(Downside) to DCF : 34.5% Terminal Discount Rate:12.0% Terminal FCF Growth: 5.0%

26. Questions