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TJX Cos. Eyes More Growth In Off-Price Retail Space

By: Investor's Business Daily
Posted: 7/24/2013 5:41:00 PM
Referenced Stocks: TJX

Sometimes, slow and steady wins the race in the stock market.

Just ask investors who've owned shares of discount retailerTJX ( TJX ) for the last four years. Since the market low in March 2009, shares are up a nifty 300%, almost tripling the performance of the S&P 500.

The firm's stock performance isn't a surprise because it has one of the most consistent track records of growth in the retail space. Even during the recession, the company was able to grow annual earnings, an impressive accomplishment as most other firms struggled.

In the latest fiscal year, earnings rose 28% to $2.55 a share while sales grew 12% to $25.9 billion. Even better, annual return on equity of 55.5% and pretax margin of 11.9% hit multiyear highs.

TJX has a market capitalization of just over $37 billion. In June, it declared a quarterly dividend of 14.5 cents a share, giving it an annual yield of 1.1%.

In the U.S., it operates 1,047 T.J. Maxx, 911 Marshalls and 426 HomeGoods stores. It also has operations in Canada and Europe.

When the company reported quarterly results in May, earnings and sales growth decelerated from the prior quarter. It cited difficult comparisons for the slower growth. Same-store sales rose 2%. At Marshalls and T.J. Maxx, same-store sales rose a combined 1%. At HomeGoods, sales rose 7%. Europe also did well, with sales up 4%.

Earnings aren't due until Aug. 20. The current consensus estimate is for earnings to rise 12% to 63 cents a share with sales up 7% to $6.38 billion. In May, TJX forecast same-store sales up 2%-3% for the quarter.

TJX recently cleared a flat-base buy point of 51.94. Volume never came into the stock, though, and it's drifted back to the buy point in light volume.

The stock is also up 12% from an early breakout at 45.92.