As the all-important holiday season approaches, political
warfare in the nation's capital, combined with tepid job growth,
doesn't bode well for the retail sector. Nonetheless, certain
retailers are overcoming these headwinds-which means they're
positioned to take off when conditions improve.
Below are two retail companies with inherent advantages that buffer
them against the travails of their peers, allowing investors to
prosper, even during uncertain times.
As an added bonus, they're not shy about returning value to
investors through buybacks, and will continue to generate growth as
the retail industry picks up.
), the nation's largest off-price retailer, operates about 3,000
stores through its subsidiaries TJ Maxx, Marshall's, and HomeGoods.
Its business model provides a competitive edge in a challenging
retail environment, by offering a viable alternative to customers
who may stray from full-priced items at other stores.
TJX has enormous growth potential, domestically and
internationally, without cannibalizing its own business. Overall,
the company plans to expand its total number of stores by over 50%
to 4,700 worldwide.
The company has grown sales an average of 7% for the past five
years since the recession, and picked up this pace to 12% growth in
For the first half of fiscal 2014, the firm bought back $625
million worth of stock, or 12.9 million shares. TJX expects to
repurchase about $1.3 billion to $1.4 billion in shares in fiscal
The industry leader in off-price merchandise, TJX's
price-to-earnings (P/E) ratio of 20.4 is an attractive discount to
the industry average of 28.3. This growth company also offers a 1%
yield to boot.
Bed Bath & Beyond
) operates a chain of 1,471 domestic retail stores under the names
Bed Bath & Beyond, Harmon and Harmon Face Values, and World
Market in all 50 states in the US and Canada.
Bed Bath & Beyond's comparable store sales have grown at a rate
of 5% from 2009 to 2012, and the firm was able to register 2.5%
store sales growth, even as the US retail market remained weak.
During the quarter, the company repurchased about $257 million of
its stock, or about 3.5 million shares. It still has a $1.8 billion
remaining balance authorized on its repurchase program.
The housing market's continued recovery will translate into more
good news for this domestic giant, especially since one of its
previous competitors-the now bankrupt Linens n' Things-continues to
liquidate its assets.
Its P/E ratio stands at a bargain of 15.8, well-below the industry
average of 24.3. While the company waits for the retail market to
recover, it's benefiting from a steady housing market that will
only get stronger as economic recovery speeds up.
Editor's Note: This
article by Khoa Nguyen was originally syndicated by
Below, find some more great investing and trading content from
Five Dividend Stocks With Growth Potential
Global Guru Eyes Drug and Internet Plays
Three Scenarios for Gold