Off-price retailers have steadily gained market share at the expense of their full-price rivals in recent years. This trend has driven big share-price gains for off-price giants TJX Companies (NYSE:TJX) and Ross Stores (NASDAQ:ROST). Both stocks currently sit near all-time highs, ahead of the companies' second-quarter earnings reports.

There could be more gains in store for investors. Accelerating economic growth in the U.S. and a rebound in apparel sales is likely to have driven extremely strong results at TJX and Ross Stores during the second quarter. Those trends are likely to continue in the second half of the year.

The first quarter was solid, despite headwinds

Back in May, executives at numerous apparel-focused retailers -- including TJX and Ross Stores -- noted that a late start to spring had negatively affected sales in the first quarter. Nevertheless, both off-price leaders posted solid 3% comp sales gains in Q1, beating their forecasts -- which were extremely conservative, as usual.

Earnings per share also came in ahead of expectations for both retailers. TJX posted EPS of $1.13, up 38% from $0.82 a year earlier, while Ross Stores' EPS surged 35% to $1.11, compared with $0.82 in the prior-year period.

The second quarter was probably even better

In conjunction with their Q1 earnings reports, TJX and Ross Stores both forecast that comp sales would rise 1% to 2% in the second quarter. However, both companies have long track records of providing very conservative guidance. Under normal conditions, they usually exceed the high end of their sales and earnings forecasts. Last quarter appears to have been a particularly good quarter for U.S. retail sales, potentially leading to larger-than-usual sales and earnings beats.

The exterior of a Ross Dress for Less store

Ross Stores and TJX could be poised for big Q2 sales and earnings beats. Image source: Ross Stores.

Recently released government data show that U.S. retail sales rose about 6% year over year in the May-through-July period, which roughly lines up with the second fiscal quarter for retailers. Sales rose 6.6% at clothing and clothing accessories stores, which is probably the closest proxy for TJX and Ross Stores. For comparison, sales at clothing and clothing accessories stores rose 4.1% in the period from February to April.

Sales at furniture and home furnishings stores and general merchandise stores -- more distant proxies for the off-price chains -- rose about 4% last quarter, which was roughly in line with the first quarter.

Given the overall uptick in U.S. retail sales, especially for apparel, it seems very likely that comp sales growth accelerated for both off-price leaders last quarter. (Another positive data point is that Nordstrom, which has been a big laggard in the off-price market recently, achieved a 4% off-price comp sales increase last quarter.) I expect TJX and Ross Stores to report Q2 comp sales gains of around 5%, and I wouldn't be surprised if one of them manages to reach 6% or even 7%.

Of course, analysts -- and the market more broadly -- are already factoring in modest sales and earnings beats for both companies. However, their estimates still seem overly conservative.

Only the beginning?

Looking ahead to the second half of the year, there could be more good things in store for TJX and Ross Stores. The recent liquidation of Toys R Us and the almost-completed liquidation of regional department store operator Bon-Ton will enable off-price retailers to continue gaining market share.

TJX will also face a very easy year-over-year comparison in the third quarter, as comp sales were flat in the year-ago period because of some fashion missteps, as well as unfavorable weather.

Within the U.S., TJX is likely to benefit from bigger sales and earnings tailwinds than Ross Stores in the second half of the year. But conditions may be tougher in international markets, which account for about 24% of TJX's sales, whereas Ross Stores only operates in the United States. As a result, both companies look like equally good bets on the continued strength of off-price retail.

Adam Levine-Weinberg owns shares of Nordstrom and The TJX Companies and is long January 2019 $50 calls on Ross Stores and short January 2019 $90 calls on Ross Stores. The Motley Fool recommends Nordstrom. The Motley Fool has a disclosure policy.