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ITG analyst Linda Tsai said she thinks retailers such as the ones that hit a 52-week high Thursday have been working on cutting costs, which is catching the attention of investors. She noted that for some retailers, the cost of goods in the second half of 2012 will be lower than it was the previous year.
The discounted retailer bought two of
Fidelity Investments' buildings in Marlborough, Mass., on Wednesday, according to the
"Over the past five years, TJX improved gross margin (GM) by 290bps, and impressively managed to mitigate cost pressures in 2011 as merchandise margin (MM) was up yr/yr (up 10bps in Q4 which incurred cost pressures and aggressive promo activity)," Wells Fargo analysts wrote in a Feb. 23 report. "TJX continues to expect GM improvement in 2012 with the majority driven by MM improvement. We model GM up 50bps for 2012."
Shares of TJX hit a 52-week high Thursday of $37.69. The stock's 52-week low of $24.13 was set on March 18.
TJX has an estimated price-to-earnings ratio for next year of 14.62 times; the average for apparel retailers is 16.29. For comparison,
Limited Brands(LTD) and
The Gap(GPS) both have lower forward P/Es of 14.54 and 12.24, respectively.
Twenty-one of the 31 analysts who cover TJX rated it buy; 10 analysts gave the stock a hold rating.
TheStreet Ratings gives TJX an A+ grade with a buy rating and
$48.68 price target. The stock closed Thursday at $37.74 and has risen 16.85% year to date.