6. TJX Companies Inc (NYSE:TJX)
Number of Hedge Fund Investors: 63
Barclays believes TJX Companies Inc (NYSE:TJX) is one of the stocks that can be a good choice for investors looking to diversify their portfolios and hedge risks in a concentrated market. In May, TJX Companies Inc (NYSE:TJX) posted strong fiscal Q1’2025 results that show TJX is benefitting from the current inflationary environment. TJX Companies Inc (NYSE:TJX) also raised the full-year EPS guidance to $4.03 to $4.09 vs. the prior guide of $3.94 to $4.02. The company expects comp store sales to grow by 2 to 3% and pre-tax profit margins of 11 to 11.1% (vs. the prior guide of 10.9% to 11%).
TJX Companies Inc (NYSE:TJX) continues to shine despite the rising inflation as analysts believe the off-price retailer can survive (and even thrive) because consumers prefer discounted stores when times are tough. During the first quarter, TJX Companies Inc’s (NYSE:TJX) HomeGoods business saw comparable-store sales jump 4%. Overall, TJX’s comp sales jumped 3% in the first quarter, coming in at the higher end of the management guidance. Analyst expects fiscal Q2 to be better than the previous quarter as traffic is estimated to increase amid summer.
Wall Street estimates TJX Companies Inc (NYSE:TJX) earnings to grow 10% in the next year while revenue growth is expected at 5.5%. The stock is trading at 24 times its forward earnings, which isn’t outlandishly high given the stock’s long-term secular growth catalysts.
Madison Investments U.S. Equity Strategy stated the following regarding The TJX Companies, Inc. (NYSE:TJX) in its fourth quarter 2023 investor letter:
“Whether it’s performance by market capitalization, sectors, or any other factor, stock markets are intrinsically cyclical. Some cycles are long-term, taking decades to unfold, and some are short-term, lasting months, weeks, or even days. Many are medium in length, lasting two, three, or several years. Most cycles occur because a trend often creates the seeds of its own reversal. We at Madison Investments are certain that market cycles will occur, but it doesn’t mean we can predict their timing or magnitude. We don’t think we can. This is perhaps a major difference between us and many other investors. Most investors believe it’s their job to time market cycles despite overwhelming evidence that it’s nearly impossible to do so with enough accuracy to make such an effort profitable over long periods. We avoid making calls about market cycles and spend zero minutes thinking about them, not because we don’t think they can be important, but because we think they’re inherently unpredictable in duration.
This mentality of our team is generally true for other kinds of cycles, such as macroeconomic, industry, or company-specific, but is a bit more nuanced for those. We make no explicit prediction about cycles on which we base a buy or sell decision. Still, we are acutely aware of the various cyclical forces at work, and depending on whether we think we have the ability to assess the length or intensity of such, we may incorporate them to various degrees.
Let’s use a few examples to illustrate our point. We’ve been invested in off-price retailer The TJX Companies, Inc. (NYSE:TJX) for just under ten years, having invested in 2014 in our Large Cap strategy. TJX is one of the most recession-resistant companies we own due to its perennial value proposition to customers; customers always like to save money, especially when economic times get tough. As a result, the company has had an exceedingly steady revenue and earning profile over the past several decades…” (Click here to read the full text)
