TJX Companies (TJX): The Discount Pawn

Weekly Babies With Bathwater Watchlist

At the end of each trading week, Hillbent scans for the equity market for potential anomalies which exhibit extremely oversold and overbought conditions. Past observations have revealed that such candidates may experience reversal corrections to the upside or downside once the market reconfirms that their fundamentals remain solidly intact or relatively poor. From a contrarian perspective, these lists may also serve as a precursor to changes in institutional sentiment and underlying fundamentals.

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At the end of each trading week, Hillbent scans for the equity market for potential anomalies which exhibit extremely oversold and overbought conditions. Past observations have revealed that such candidates may experience reversal corrections to the upside or downside once the market reconfirms that their fundamentals remain solidly intact or relatively poor. From a contrarian perspective, these lists may also serve as a precursor to changes in institutional sentiment and underlying fundamentals.

The purpose of this report is not to provide specific recommendations, but instead serve as a time-saving reference tool and starting point for investment ideas as the upcoming trading week unfolds. Of course, the results generated are not always perfect and users are strongly encouraged to perform their own due diligence on these names. Note that overbought and oversold conditions are based upon proprietary algorithms and quantitative models instead of conventional technical analysis indicators. As a supplement to this report, please refer to our Market Condition Summary to determine if market direction trends support a bullish or bearish investment bias over short-term, intermediate, and long-term timeframes.

F2Q09 Earnings Call

January 15, 2009 10:00 am ET

“Ice storm leaves one million without power in US northeast” - AFP, December 14, 2008.

For retailers, the thought of one million potential shoppers iced in with no power over a weekend in December is the worst form of nightmare. And that’s in normal times. For Briggs & Stratton (BGG) however, ice storms create power outages, and power outages create opportunity.

Joe Mezrich, of Nomura Securities International, coined the term "cheap losers" for stocks selling at a cheap price-to-book-value ratio and a recently depressed stock price. In the four bear markets since 1974, cheap losers far outpaced S&P 500 gains during the ensuing recoveries. From the July 2002 market bottom, the S&P rose 17% while cheap losers gained 54%. In today's market, many value stocks have taken their worst hits in decades, but this may mean a bunch of stocks that have become cheap losers are approaching the limit of their downward slide.

In a B.I.G. Tips report released Friday to Bespoke Premium subscribers, we detailed how the current earnings season has compared to past earnings seasons so far. 

Since Alcoa (AA) reported earlier this month, 159 US companies covered by analysts have released earnings. Below we list the best and worst performing stocks (>$10/share) in reaction to their earnings reports. We measure this by looking at the change on the first trading day following the company's report. For companies reporting in the morning, we use that day's change, and for companies reporting after the close, we use the following day's change. So far, Sunpower (SPWRA) has had the best response to earnings, rallying 24.55% on the day. Sunpower is followed by Continental Airlines (CAL), ICU Medical (ICUI), Peabody Energy (BTU), and Nucor (NUE). Other notables on the list of winners include GE, Briggs & Stratton (BGG), Monsanto (MON), and JB Hunt Transport (JBHT). On the downside, Badger Meter (BMI) has had the worst reaction to earnings, declining 28.9%. BMI is followed by Domino's Pizza (DPZ), Piper Jaffrey (PJC), and State Street (STT).

F1Q09 Earnings Call

October 16, 2008; 10:00 am ET

Potash Inc. (POT) – With the financial bailout package unfolding before our eyes, the reality isonce again a realization that the degree to which financial toxins have become entwined in the global body is greater than anybody guessed. The simultaneous failure of European financial institutions serves to remind us that other central banks and treasury officials elsewhere have some of their own nursing to do especially in light of the revelation that the alternative (for the U.S. economy) is not likely to be a pretty sight. The rally in the dollar coupled with the prospect of weakening demand has helped bury commodity prices. Shares in this fertilizer manufacturer have slipped 7.4% to $136.52 and stand well-off a 52-week high at $240 and change. Around 13% of open interest is in action today with a notable trade occurring in the December contract at the 170 strike, where 4,800 lots appear to have been sold at a premium of 9.90 per contract. The calls have a 35 delta inferring a one-in-three chance of landing in the money within three months. Elsewhere the October 130 puts appear to have been bought in defense of further reckless share price declines, while there also appeared to be evidence of selling higher strike October calls as if a door was slamming firmly shut behind upside potential for this company’s share price.

Prices of Treasury coupon securities have barely budged in overnight trading. Each of the benchmark issues has gained 1 basis point in yield. The 2 year note yields 2.44 percent. The 5 year note yields 3.16 percent. The 10 year note yields 3.90 percent and the Long Bond yields 4.52 percent.The yield differential between the 2 year note and the 10 year note is 146 basis points.

The rally in the dollar continued overnight and weighed on other markets. The dollar rallied to over 110 yen and the Euro sank to $1.4723. The British pound is in the midst of an epic collapse. Bloomberg reports that the pound touched $1.8554 overnight and that is the 11th daily decline of that currency versus the dollar. That is the longest losing streak in 37 years for that currency.

Best-in-breed Financials - US Bancorp (USB), Goldman Sachs (GS), Ultra Financials (UYG), Financial Select Sector SPDR (XLF)

F4Q 08 (Qtr End 03/30/08)Earnings Call Transcript

KBW Regional Banking ETF (KRE) – Regional banks continue to be a particularly raw bruise site in the already-buffeted financial sector. Option traders continue to seek out unusual out-of-the-money put positions in the KBW Regional Banking ETF. With the index share price down 4.2% to $32.19 amid continued slump for small regional banks, it appears that a trader may have sold a large position in September 22.50 puts for 20 cents apiece in order to buy into December 30-strike puts for 20 cents. The trader is confident enough that there won’t be a collapse in the regionals by mid-September that would take shares below the $22.50 level (they’ve traded as low as $21.72 over the past 52-weeks) but is looking to guard against a pull back below $30 by year’s end.

There is a commonly told myth that says that companies that pay a dividend misallocate funds that could be used to generate new revenue or grow the company. According to this myth the lack of growth in the company will keep the stock's price low over the short and long term. This is the most fascinating misconception that exists about dividend paying companies. The theory seemingly makes sense, yet after critical examination, the truth comes out.

The following is the performance of Dividend Achievers in the last year from August 8, 2007 until August 8, 2008. These stocks either hit a new low within the year and moved higher from there, or they have started the year at a low and continued upward. Keep in mind that the percentage change of these stocks does not include the annual dividend that would have been received over the same period of time and just looks at stock appreciation.

Q3 2008 Conference Call

April 17, 2008 10:00 am ET

Want some income? Below is a list of S&P 1,500 stocks that yield more than 3% and go ex-dividend in the next month. The list is sorted by ex-date, with the closest ones on top. REG's ex-date is tomorrow and pays $0.73 per share.

Remember to check whether or not these are taxed at REIT status and also remember that to receive the dividend, you must own the stock at the close prior to the ex-date.

F2Q08 (Qtr End 12/31/07) Earnings Call

January 17, 2008 10:00 am ET

F1Q08 Earnings Call

October 18, 2007 10:00 am ET