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4 Factors That Make TJX Companies (TJX) an Attractive Stock

Zacks Equity Research

The TJX Companies, Inc. TJX is riding on splendid comparable store sales (comps) and efficient growth strategies. Its endeavors are likely to spur further momentum and help the company deliver an above-average performance in the near term. Notably, this Zacks Rank #2 (Buy) stock has increased almost 12% in the past year, while the industry grew 17.3%.

Let’s delve deeper.

Focus on E-Commerce Growth & Store Expansion

The company regularly opens stores and expanded fast across the United States, Europe and Canada. While many retailers are resorting to store closures, TJX Companies added 75 stores during the first quarter of fiscal 2020, taking the total store count to 4,381 as of May 4, 2019. The company intends to continue expanding store base to operate about 6,100 stores in the long term. Apart from this, TJX Companies has undertaken several initiatives to boost online sales and strengthen e-commerce business. The company’s off-price model along with its strategic store locations, impressive brands and fashion products has been driving performance both in stores and online.

Efficient Marketing Strategies & Loyalty Programs

TJX Companies is committed toward driving comps through effective marketing initiatives and loyalty programs. Incidentally, the company’s aggressive marketing and advertising campaigns through multiple mediums (TV, radio and social media) have been boosting traffic at its stores. Its gift-giving initiatives, which is unique among off-price retailers, and loyalty card program (which offers consumers a non-credit card choice and soft benefits such as early shopping hours) also help improve customer engagement.

Robust Comps

During the first quarter of fiscal 2020, TJX Companies’ consolidated comps grew 5% year over year, fueled by increased customer traffic at all segments. The company’s apparel and home businesses were strong in the quarter. Notably, the fiscal first quarter marked the 19th straight period of higher customer traffic at both Marmaxx and the entire company. Most segments reported higher comps, courtesy of consumers’ favorable response to the company’s brands and impressive merchandise assortments at reasonable prices. In fiscal 2020, consolidated comps are expected to grow 2-3%, and comps at Marmaxx are also expected to grow in the same range.

Raised Outlook

TJX Companies is well positioned to take advantage of solid opportunities in the market for branded merchandise, given its impressive inventory position. Further, consistent rise in customer traffic keeps management encouraged about witnessing continued growth. That said, management lifted its earnings guidance for fiscal 2020.

The company now projects earnings per share of $2.56-$2.61, indicating year-over-year growth of 5-7% (including last year’s pension settlement charges) and 4-7% (excluding last year’s pension settlement charges). Earlier, the company projected earnings per share of $2.55-$2.60, implying year-over-year growth of 5-7% (including last year’s pension settlement charges) and 4-6% (excluding last year’s pension settlement charges).

Without a doubt, TJX Companies is set to add new leaves to its growth story.

Looking for More? Check These Lucrative Picks

Target TGT, with long-term earnings per share growth rate of 6.6%, carries a Zacks Rank #2.  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Walmart WMT, also with a Zacks Rank #2, has long-term earnings per share growth rate of 4.7%.

Abercrombie & Fitch ANF, with long-term earnings per share growth rate of 15.3%, carries a Zacks Rank #2.

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