TJX Companies: Perfect Business For A Recession, But At An Imperfect Valuation

Summary

• TJX has an almost perfect business model for a weak economic environment and cautious consumer spending.
• This worked perfectly fine during the Great Recession where sales and net income didn't participate in the recession.
• However, this didn't save the stock from falling into the off-price segment of the stock market.
• Given the historically high valuation, I see the risks of the above to repeat. Sell due to limited upside, but not-low downside.

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Intro

The TJX Companies, Inc. (NYSE:TJX) is a multi-brand off-price retailer. All TJX store brands operate with this business model, sourcing branded and designer merchandise opportunistically (e.g. in bulk, with modest blemishes or off-season) to offer significant discounts. Products are primarily discretionary in nature (fashion, shoes, home

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.