Look for TJX to draw those frugal consumers, like a magnet

Posted Sep 14th 2009 6:00PM by Joseph Lazzaro
Filed under: Stocks to Buy

If you haven't purchased shares of The TJX Companies (NYSE: TJX), and can tolerate moderate risk, now's the time to establish a position to have a chance at outsized gains.

Off-price family apparel and home fashion retailer TJX (operator of the T.J. Maxx, Marshalls and HomeGoods chains) is poised to gain market share in the era of the frugal consumer.

Hence, it goes without saying that I'm reiterating my Buy rating for TJX, first recommended on May 12, 2009 at a price of $28.23.

Technically, TJX's chart looks beautiful. Note the consistent staircase movement up, and rare is the week that the stock comes close to the 50-day moving average: that indicates that institutional investors are continually adding to their TJX positions - a bullish indicator. The First Call FY2009/FY2010 EPS estimates for TJX are $2.40 to $2.65.

Stock Analysis: The TJX Companies is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 50% position in TJX now; then buy another 25% in three months, if U.S. economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your TJX position before December 2009. Sell/Stop Loss if you were to buy shares in this company: $22.

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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.

Tags: marshalls, The TJX Companies, TJ Maxx, TjMaxx, TJX