The soft economy is actually driving some retail winners, and it isn’t really the old analogy of just the wealthy doing well. The TJX Companies, Inc. (NYSE: TJX) is putting in new all-time highs this morning. Before today, shares of TJX had seen highs of $36.95, yet shares are trading north of $37.00 and the prior 52-week trading range had been $25.49 to $36.95.
Home furnishings, knick-knacks, and other items can be put off. Butunless you are a homeless person or are into wearing clothes with holesand stains, you do at some point have to buy new clothes whether youlike to or not. When times are tough, the masses don’t go toNordstrom’s, Saks, or Neiman’s to find their bargains. Sure, they maygo for the twice per year sales, but the trade down is where they areheading to.
TJX Companies ownership of T.J.Maxx, Marshall’s, and more are drivingtheir strong numbers. These stores carry many close-outs and are ableto discount to peers over a zero-service and lower presentationmerchandise market. You can find many brands such as Nike, Polo, andmany many more at the stores for a fraction of what mall-basedretailers sell these for.
With this year’s earnings expected to be $2.27 that gives an expectedP/E ratio of 16.3, yet the eighteen month-out number of $2.49 EPS givesa forward P/E of under 15 for investors looking farther out. It seemsthat investors are still looking at TJ Companies as a bargain just likemany shoppers are for their clothes.
Jon C. Ogg
August 11, 2008
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