Not unlike the off-price deals on name-brand merchandise found on their shelves, TJX's
Following news of slow sales at style-conscious stores such as American Eagle Outfitters
While the retailer's press release credited disciplined cost controls and inventory management, I don't discount the fact that pinched shoppers (who still need new clothes) simply want to get more bang for their buck. Positioning itself as a "name brand" for off-price merchandise, T.J. Maxx somehow avoids the stigma that is often attached to discounters.
Total sales for December were up 6%. The sluggish sales growth at other retailers means plenty of inventory is sitting out there for resellers like TJX to take off their hands.
Now, investors stand to hit the sweet spot on TJX shares. For at least the second time this year, the company raised earnings guidance. This time, fourth-quarter earnings per share are expected to register in the $0.60-$0.63 range. That will bring earnings for the year up to $1.89-$1.92 per share.
Hence, at today's level, you're paying 15 times forward earnings for a proven business model growing 13% annually, paying a healthy 1.3% dividend yield, and steadily repurchasing shares. Why, that sounds like the kind of deal you'd find stocked on T.J. Maxx's shelves.
Other retail Foolishness:
The Motley Fool owns shares of American Eagle, which is a Stock Advisor selection. Try out the service free for 30 days.
More from The Motley Fool
TJX Stock Could Surge 30% to Hit $100 in 2018
While TJX stock has fallen out of favor with investors recently, a surge in earnings next year could reignite the stock.
Is TJX Companies Running Out of Steam or Taking a Breather?
A rare quarterly earnings miss has investors asking questions.
3 Amazon-Proof Stocks to Buy Now
Amazon.com is threatening to cannibalize the sales of a large swath of retailers. However, a handful of best-in-class retail companies have Amazon-proof business models.