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2 Reasons to Like TJX and 1 to Stay Skeptical

By: StockStory

May 07, 2025 at 00:02 AM EDT

TJX Cover Image

Since May 2020, the S&P 500 has delivered a total return of 94.2%. But one standout stock has nearly doubled the market - over the past five years, TJX has surged 167% to $129.50 per share. Its momentum hasn’t stopped as it’s also gained 10.8% in the last six months, beating the S&P by 17%.

Is now still a good time to buy TJX? Or are investors being too optimistic? Find out in our full research report, it’s free.

Why Does TJX Spark Debate?

Initially based on a strategy of buying excess inventory from manufacturers or other retailers, TJX (NYSE: TJX) is an off-price retailer that sells brand-name apparel and other goods at prices much lower than department stores.

Two Positive Attributes:

1. Surging Same-Store Sales Show Increasing Demand

Same-store sales is an industry measure of whether revenue is growing at existing stores, and it is driven by customer visits (often called traffic) and the average spending per customer (ticket).

TJX’s demand has been spectacular for a retailer over the last two years. On average, the company has increased its same-store sales by an impressive 4.4% per year.

2. Economies of Scale Give It Negotiating Leverage with Suppliers

With $56.36 billion in revenue over the past 12 months, TJX is a behemoth in the consumer retail sector and benefits from economies of scale, giving it an edge in distribution. This also enables it to gain more leverage on its fixed costs than smaller competitors and the flexibility to offer lower prices. However, its scale is a double-edged sword because it’s harder to find incremental growth when you’ve penetrated most of the market. To expand meaningfully, TJX likely needs to tweak its prices or enter new markets.

One Reason to be Careful:

Long-Term Revenue Growth Disappoints

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Regrettably, TJX’s sales grew at a tepid 6.2% compounded annual growth rate over the last five years. This wasn’t a great result compared to the rest of the consumer retail sector, but there are still things to like about TJX. TJX Quarterly Revenue

Final Judgment

TJX’s positive characteristics outweigh the negatives, and with its shares topping the market in recent months, the stock trades at 27.8× forward P/E (or $129.50 per share). Is now the right time to buy? See for yourself in our full research report, it’s free.

Stocks We Like Even More Than TJX

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today.

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