Most department store companies are having a tough time due to a weak economic environment lately, but that doesn´t mean there aren´t any good investment opportunities in the sector. On the contrary: The TJX Companies (NYSE:TJX) offers superior growth prospects, Macy´s (NYSE:M) is a steady performer with a high quality management team and Sears Holdings (NASDAQ:SHLD) is a risky contrarian bet with plenty of upside potential. Department store companies are offering alternatives for different kinds of investors.

TJX for growth
TJX has a successful and differentiated business model: through brands like TJ Max, Marshalls, HomeGoods and Winners among others, the company operates more than 3,200 discount stores in the U.S., Canada and Europe.

The company provides department stores the opportunity to clear excess inventory at very favorable terms; TJX is willing to purchase less-than-full assortments of items, styles, and sizes, as well as quantities ranging from small to very large. This gives TJX significant bargaining power with suppliers, which the company translates into pricing discounts of between 20% and 60% versus traditional retail prices.

Consumers are embracing the concept; the company delivered a healthy increase of 9% in sales over the last quarter fueled by a 5% jump in comparable stores sales during the period. Adjusted diluted earnings per share grew by a remarkable 21% year-over-year to $0.75 per share, this was better than the average estimate by Wall Street analysts of $0.738 per share for the quarter.

TJX also raised the low end of its earnings guidance; the company now expects earnings per share in the range of $2.80-$2.83 for fiscal 2014. CEO Carol Meyrowitz sounded quite optimistic regarding prospects for the key holiday quarter: "The fourth quarter is off to a good start and we see exciting opportunities for this holiday selling season".

Shares of TJX don´t come cheap at a P/E ratio above 21.4, but the company is clearly firing on all cylinders and reaching the holiday quarter with plenty of momentum. TJX has plenty of room for expansion both in the US and abroad, so premium growth opportunities merit a premium valuation.

Macy´s for quality
Macy´s is a more stable and mature business than TJX, but the company has a high quality management team which is proving its ability to successfully navigate through a hostile economic environment. In times when most other big department stores are being hurt by weak demand, Macy´s is reporting surprisingly strong performance.

Total sales in the third quarter of 2013 were $6.276 billion, up 3.3 % from the third quarter of the previous year on the back of a 3.5% increase in comparable sales. Including sales from departments licensed to third parties, third quarter sales on a comparable basis were up by a strong 4.6%.

Due to rising margins and a reduced share count via stock repurchases, earnings per share increased by a whopping 31% to $0.47 per share during the quarter. This was the company's 15th consecutive quarter of improving earnings per share, so management is clearly executing well in a tough environment for the industry.

CEO Terry J. Lundgren also provided a positive view for the coming quarter: "Our business improved during the quarter, with particular strength in October, so we are entering the fourth quarter with confidence"

Macy´s trades at a P/E ratio of 14.3, a very reasonable valuation for a well managed department store delivering solid financial performance.

Sears: the contrarian bet
Sears can´t seem to stop the bleeding, the company reported a 6.6% decrease in revenue during the last quarter to $8,272 million versus $8,857 million in the same quarter of the previous year.

The separation of Sears Hometown and Outlet business as well as the reduction in the number of Kmart and Sears' full-line stores where partially responsible for the decline. However, same store sales are also falling: Sears reported a decrease of 3.1% in domestic comparable store sales comprised of decreases of 2.1% at Kmart and 4% at Sears Domestic.

Net income for the quarter was loss of 534 million, higher than the 498 million loss the company reported in the third quarter of 2012. Sears is a highly indebted company with total debt of $4.7 billion, considering that the company continues losing money, this is clearly a high risk investment alternative.

On the other hand, the company´s real estate assets may be worth much more than current market value. Baker Street, a Los Angeles investment firm that is among Sears's biggest stockholders, calculates that at least $7.3 billion of value lies in the company's top 350-owned stores and its top 50 leased locations.

This would mean the stock could worth between $92 and $169 per share based on a sum of the parts valuation using those estimates, a substantial upside potential versus current market price near $61.5 per share.

Investors beware though; it's hard to tell how accurate these kinds of estimations may be. Besides, if the company continues losing money, shareholder value could be seriously eroded over time.

Bottom line
TJX offers superior growth potential in exchange for a merited valuation premium, Macy´s is a well-run department store delivering solid performance for a very reasonable price and Sears is a high risk bet with substantial upside potential based on the value of its real estate assets. There is plenty of variety to choose from among department stores. As always, Foolish investors should do their own homework to find the best alternative to fit their needs.

Andrés Cardenal has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.