Why TJX Companies Stock Climbed While the Market Sputtered Today
Key Points
He believes the shares have potential upside of more than 19%.
This comes several weeks after the company reported a blowout first quarter.
Well before market open on Tuesday, a global bank reiterated its bullish view on retailer TJX Companies (NYSE: TJX). Clearly taken by this assessment, investors pushed into the T.J. Maxx and Marshalls owner's equity, boosting it more than 3% higher across that day's trading session.
It remains a clear buy, says pundit
The analyst behind the update was UBS prognosticator Jay Sole, who maintained his buy recommendation and $197 per share price target on TJX. That's more than 19% above the stock's latest closing price.
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According to reports, Sole cited findings in the latest version of his bank's annual U.S. Off-Price and Department Store Retailers Consumer Survey as a core reason for his continued bullishness. He wrote that the survey indicated that 71% of polled consumers believe the company's flagship T.J. Maxx stores offer good value for money. That figure is well higher than the roughly 47% for Macy's and other prominent department stores.
The analyst also pointed to data indicating that customers frequenting T.J. Maxx anticipate a 14% net increase in shopping frequency over the next year. That compared very favorably to the -1% average of the overall survey. In Sole's view, traffic is the main driver of a discount retailer's comparable sales growth, a crucial metric in the retail industry.
The right retailer at the right time
TJX has posted some impressive results lately. Its "comps" rose by 6% year over year in its first quarter of fiscal 2027, and net sales advanced by a meaty 9% to more than $14 billion. Better, adjusted earnings per share soared by 29% to nearly $1.19, crushing the consensus analyst estimate. With these considerable tailwinds at its back, the company raised its comparable sales and EPS guidance for the full fiscal year.
The current economic uncertainty in the U.S. is generally favoring discount retailers, and TJX is proving very adept at navigating this moment. I'm becoming increasingly bullish on this company, and investors should too.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends TJX Companies. The Motley Fool has a disclosure policy.