TJX is a stock whose chart and business is very much like Ross Stores's ROST. On the technical aspect, it is on a very steady uptrend. TJX had been also consolidating around the $39.50 to $42.50 area last week, and it broke out on Monday, but that breakout was destroyed by the 250 point drop in the Dow yesterday. Although the breakout has been destroyed, I have confidence in TJX's overall business model and I believe that it will earn in the long term.
TJX's business model is also selling goods at cheaper prices, only that it is a departmental store, T J Maxx,T K Maxx, Marshalls, Winners sells clothing, footwear and other accessories at cheaper prices (like ROST) whereas its other two brands, HomeSense and HomeGoods provide one with decorations and other accessories for their house, something like what one stock I've put on my watchlist, Bed Baths and Beyond BBBY does. I want to reiterate that as the economy gets worse, people will go for cheaper goods. In turbulent times like these, these are the stocks to get. But, I'm not meaning that the economy will stay like that forever or that these companies I'm recommending now will only thrive during slowdowns or recessions. I believe they will do well at all times, even during expansions. The good reviews I have read and the praises for the store by friends I know from overseas tells me that the quality of TJX products is not compromised, too. Although some employees do not like working there, most are fine with working there. But one characteristic I found common with all employee reviews is complaints that their pay is too low. I feel that, during expansions or times of revenue increases, shareholders are not all they have to care about, workers too. This is important, so employees can serve the company loyally and happily. (There are numerous complaints I have read not only with TJX, the list includes ROST, WMT, DLTR, etc.)
With that, let's dive into the numbers.
TJX operates in USA, Canada and Europe. I believe that their sales would not be really affected much by the EU crisis as it sells off-price goods, which will be attractive, even more, I believe, in Europe
Stores: 2007 2,529
2008 2,652
2009 2,743
2011 2,859
2012 2,905
Their EPS has also been growing really steadily, from 0.53 to 1.93 now. Like ROST, growth accelerated through the past five years and the recession. For TJX's case, EPS growed throughout the past ten years although growth was slower in the 2003 slowdown. This equates to 13.8% compounded EPS growth over the past 10 years. EPS calculation: $33.57/$10.11=$3.32 generated in stock price each dollar retained in EPS.
EPS: 2002 0.53
2003 0.57
2004 0.60
2005 0.71
2006 0.82
2007 0.84
2008 1.04
2009 1.42
2010 1.65
2011 1.93
Dividend has also been growing fast. Not fabulous, but acceptable to me. As I said, dividend id not everything.
Dividend: 2007 0.18
2008 0.22
2009 0.24
2010 0.30
2011 0.38
Sales has been soaring as well, with sales also increasing at a fast pace. With goodwill increasing further, I believe it can expand faster than ever in the future.
Sales:2007 18.34B
2008 19.00B
2009 20.29B
2010 21.94B
2011 23.19B
While sales, dividends, EPS and store counts has increased, debt has decreased over the past three years after doubling in 2009, most likely caused by the recession. The management has made an effort to decrease debt after that, and that is commendable. But, its intrinsic value is around the $36-$38 range, which is a 14% premium to its price now. I rate TJX a buy.
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