TJX is the IBD Stock Of The Day for Friday. Shares have held their ground the past few weeks while the stock market has pulled back.
In terms of sales and store traffic, discount retailers often perform relatively well amid uncertain economic conditions as consumers cut back to protect their budgets. That trend is even more pronounced this year as consumers have turned fickle on brand loyalty in favor of keeping up with ever-evolving styles in the era of fast fashion.
William Blair analyst Dylan Carden told IBD investors are back to picking apparel winners and losers based on individual performance rather than industry trends. The best-positioned retailers are those able to forecast demand, and manage inventory to prevent steep discounts.
Loop Capital in an early July note wrote that off-price retailers are seeing greater traffic, according to end-of-quarter store checks, while mall department stores look "rough." The firm noted that "limited" clearance sales suggest better performance. Loop Capital raised its price target on TJX stock to 125 from 115 and maintained a buy rating on the shares.
Nike Stock Is Out, Abercrombie In, As Apparel Retailers 'Seek Religion' On Inventory
Elsewhere, Morgan Stanley on July 18 called TJX its preferred off-price retailer, with room for further valuation expansion thanks to its higher profitability profile, The Fly reported. The firm said TJX, Bath & Body Works and Gap are its top retail stocks following a score card analysis. Morgan Stanley raised its TJX target to 122 from 113 and kept an overweight rating on the shares.
Meanwhile, TJX recorded 20% or greater earnings growth the last four quarters, while revenue growth ranged from 6% to 13% during that time.
But analysts expect that streak to end for the company's Q2 2025 report on Aug. 21. FactSet forecasts TJX earnings increase about 8% to 92 cents per share on 4.3% revenue growth to $13.3 billion.
Experts predict comparable sales will rise 2.7%, which would mark three straight quarters of slowing growth.
TJX Stock Performance
TJX Stock ranks fourth in the Retail-Apparel/Shoes and Accessories industry group according to the IBD Stock Checkup. Abercrombie & Fitch leads the group amid its 50% share price rally this year.
TJX stock is not currently near a buy point, but it has been holding up the past few weeks.
As of Friday's close, TJX has forged a three-weeks-tight pattern, offering a 115.24 buy point.
TJX could also be set to test support at its 10-week moving average, above which it has traded since mid-May.
However, investors should be cautious in purchasing stocks given the market's pullback, and given Friday's jobs report, which raised concerns of an economic slowdown.
TJX rallied nearly 21% in 2024 and hit a record high of 115.35 on July 12, MarketSurge charts show.
TJX Stock has a 92 Composite Rating out of a best-possible 99. The Composite Rating combines various technical indicators into one easy-to-read score. Shares have a 93 EPS Rating. TJX's relative strength line is trending toward 52-week highs and has an 86 RS Rating.
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