Is TJX Companies the Smartest Off-Price Retail Stock to Buy and Hold?​

TJX has shown impressive resilience amid macroeconomic headwinds.

TJX Companies (TJX 0.17%) is a leading player in the off-price retail space. The company's flagship TJ Maxx stores are at the top of the category, and additional retailer brands including Marshalls, HomeGoods, and Sierra round out a retail portfolio centered around efficient supply strategy.

TJX's opportunistic approach to securing inventory allows it to offer name-brand goods at low cost, and the company passes on savings to shoppers. The value offered through its stores has helped support customer traffic and average ticket size and power same-store-sales growth at a time when many retailers are facing challenges.

For investors seeking exposure to the off-price retail market, is TJX still the best buy-and-hold play in the space?

Image source: Getty Images.

As of this writing, TJX stock has risen roughly 24% over the last year of trading. To its credit, the business has continued to serve up wins. Same-store sales in fiscal Q3 increased 5% year over year, and gross margin increased to 32.6% from 31.6%.

While many other retail players have faced declining customer traffic and weakening margins in response to tariff-related headwinds, tightening consumer purse strings, and other challenges, TJX continues to demonstrate impressive resilience. The strengths of the off-price retailer's product-sourcing strategies and infrastructure have become even more apparent in light of challenges facing the broader retail industry.

Today's Change

(-0.17%) $-0.27

Current Price

$153.16

The stock trades at approximately 33 times this year's expected earnings. For a company that grew earnings per share roughly 19% annually over the first three quarters of last year, with growth supported by stock buybacks, TJX trades at somewhat of a valuation premium. While the company will likely continue to serve up payout growth, the stock's dividend yield of roughly 1.1% doesn't currently offer much on the income side of things.

TJX may not look cheaply valued, but the stock is backed by a great business. The company's approach to making brand-name goods accessible for cost-conscious shoppers has been a winner amid current industry dynamics, and pain felt by other retailers could continue to be TJX's gain. Business execution has been top-notch, and few players in the retail space look better positioned to navigate macroeconomic uncertainty. For long-term investors seeking exposure to the off-price retail space, TJX continues to be the best in class.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends TJX Companies. The Motley Fool has a disclosure policy.