Bet on one thing: 2023 will be the year of the bargain hunters. With inflation still at uncomfortably high levels, shoppers will seek to stretch their dollars as far as possible, explains Gordon Pape, editor of Internet Wealth Builder.
That’s good news for discount stores, including TJX Companies (TJX). Its name may not be well known but its flagship stores are: HomeSense, Marshalls, and Winners. I’ll bet a buck that someone in your family has shopped in at least one of them.
All in all, the company has more than 4,700 stores and is ranked at number 75 in the 2022 Fortune 500 companies’ listings. The U.S. and Canada are obviously the biggest markets, but the company also operates in the UK, Ireland, Germany, Poland, Austria, the Netherlands, and Australia.
All are stable countries, although the international diversity means TJX can be subject to currency fluctuations. The company has been in business for 45 years.
Financially, the company is very strong. Sales last year were $48.5 billion, which was up $7 billion from the last pre-Covid year, 2019. It also delivered the highest sales and net income in the company’s history. TJX generated $3.1 billion in operating cash flow and ended the year with $6.2 billion worth of cash on its balance sheet, so it’s in a very comfortable position regardless of what the economy does.
The company recently reported third quarter results and although sales were only slightly up, the pretax profit margin rose to 11.2%. Both profit margin and adjusted earnings per share were above plan. The company returned $843 million to shareholders in the quarter through share repurchases and dividends.
I don’t see this as a double-your-money stock, but it has the potential to generate a modest capital gain in the 15% range and pays a decent dividend.