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.

Retail sales were down for the twelfth month in a row in August, according to an Associated Press report. Consumers stayed focused on what they need rather than what they want, as unemployment remains high and even those employed worry about the future of their jobs.

The silver lining, though, is that the coming holiday season might not be as bad as many thought.

Some retailers actually showed gains. TJMaxx (NYSE: TJX) and Old Navy, a Gap (NYSE: GPS) company, for example, saw year-over-year sales increases, though upscale stores generally sustained declines. The action on the discount side could be an early sign that the consumer is ready to play.

When you think about retail stocks, which ones come to mind? For me, Wal-Mart (NYSE: WMT) and Target (NYSE: TGT) are at the top of the list. I think it has to do with the powerful brand equity that both possess. That, and they receive a lot of press between them. Honestly, I don't think of TJX (NYSE: TJX) as being in that league. I don't shop at T.J. Maxx, Marshalls, or any of the company's brands. I don't know many people who do.

But I thought I would take a look at the retailer's latest earnings report to see how it was doing. Unfortunately, there was nothing too impressive about the numbers. It wasn't disastrous or anything like that, it just didn't convince me that more due diligence was necessary.

For the fiscal third quarter, diluted earnings per share on an adjusted basis dropped two pennies to $0.54. The bottom line met results. Excluding the effect of currency exchange, same-store sales rose 1%. Not that great, really. Plus, the outlook from management was cautious, as one might expect. I will give TJX credit for its cash-flow statement: there was a nice increase in the amount of cash the company generated from operations for the thirty-nine-week period.

The Associated Press reports that a "Depression Era" mentality is taking hold among consumers. This matters to the overall economy since 70% of Gross Domestic Product (GDP) growth depends on consumer spending. Maybe this is good news because it will make people care more about spiritual matters, and less about material ones.

AP bolsters its consumer mentality shift with excerpts from a Nielsen survey that interviewed 50,000 consumers by e-mail during the first week of June. The survey found that

• 63% of consumers are cutting spending due to rising gas prices, up 18 percentage points from a year ago;
• 78% of consumers are combining shopping trips;
• 52% are eating out less often;
• Consumers are cutting more coupons;
• They do more of their shopping at super centers; and
• They buy less expensive brands.
  

Target Corp. (NYSE: TGT) vs. Wal-Mart Stores Inc. (NYSE: WMT). As Georges Yared wrote in our Battle of the Brands special, Wal-Mart is the behemoth, and Target is a rising titan that could pose a substantial threat to its dominance. I've always thought of Wal-Mart as being the better logistics company, and Target is better at retailing and merchandising. Target's runaway success in fashion, and Wal-Mart's dismal failure provide evidence of this.

In March, I wrote about Target's hottest couture showing up on eBay, often at several times its retail price. Well Wal-Mart's latest foray into fashion won't be showing up on eBay, but you might be able to find it at your local dollar store sometime soon, as several hundred of the stores that stocked its Mark Eisen line have pulled it due to lack of consumer interest. Part of the problem was a lack of promotion, and most Wal-Mart shoppers don't know who Mark Eisen is. As portfolio manager Patricia Edwards told the Wall Street Journal (subscription required), "Wal-Mart is so good at providing things based on price that I'm not certain they've yet grasped how to promote items that aren't solely based on price."

One of the problems I think Wal-Mart's having is that, without brand recognition, the products just aren't that great, or even that cheap. I don't buy clothing at Wal-Mart, but not because I'm a snob. You can usually get nicer stuff for less money at TJMaxx or Filene's Basement if you're willing to look around a little.

Target was able to come up with looks that were stylish and weren't available elsewhere. Wal-Mart's trying to compete on price in the fashion industry, and I think it's probably destined to fail.

TJX Cos. (NYSE:TJX) has admitted that hackers stole 45.7 million credit and debit cards from its computer network over an 18-month period in what one analyst described as the biggest theft of its kind ever, according to the Associated Press.

The owner of TJ Maxx and Marshall's, which first disclosed the thefts more than two months ago, outlined the extent of the problem in a filing with the Securities & Exchange Commission, the AP said, adding that 45,000 customers who returned merchandise also had their personal data stolen.

This is a public relations disaster.

The company should have disclosed to customers as much information as it could in January without jeopardizing any investigations. People would've grumbled, but they would have understood the situation because computer thefts are a fact of modern life.

Since the company waited to disclose the extent of the problem, TJX made customers even angrier than they would have been otherwise. Winning them back won't be easy.

It's no wonder that the company is being sued by invidiudals and investigated by the Federal Trade Commission.

The lesson here for companies is that it's a bad idea to bury bad news in an SEC filing. That information is easily accessible and somebody will read it eventually.