We're Initiating a New Portfolio Position as Retailer Closings Surge

Symbol	Transaction Type	# Shares Traded	Recent Price $	Shares Owned After Trade	% Portfolio
TJX	Buy	461	124.85	465	1.1

After you receive this Alert, the Pro Portfolio will buy 461 shares of TJX Companies TJX at or near $124.85. After the trade this new position will account for 1.1% of the Pro Portfolio’s assets.

Following the recent low double-digit retrenchment in TJX shares, we are calling up the stock from the Bullpen, establishing a $137 price target for this discount retailer and historical dividend payer.

Typically, TJX generates 55%-58% of its annual earnings per share in the second half of the year, which means its EPS in the second half grows significantly compared to the first half. For 2025, TJX is expected to deliver EPS of $4.50, up around 5.5% year over year, but we are interested in capturing the EPS acceleration in the second half of this year, which is expected to grow 33% compared to the first half. For comparison's sake, the S&P 500 basket of companies is currently expected to deliver EPS growth of 8.6% in the second half of the year compared to the first half.

The second half of the year includes the Back-to-School shopping season and the year-end holidays, which helps explain the seasonal strength at TJX. But two other factors make TJX even more appealing as we move into H2 2025.

As we’ve seen, consumers remain very selective in their spending, which means they are looking to get the biggest bang they can for their spending bucks. TJX’s businesses, which span off-price apparel and home fashions, fit that bill rather nicely, in part because of the company’s opportunistic buying strategies that include acquiring merchandise at substantial discounts due to production overruns, brand closeouts, inventory liquidations, and other destocking initiatives.

This year alone, we are seeing store closures from Forever 21, Macy’s M, Big Lots BIG, Foot Locker FL, Kohl’s KSS, JCPenney, At Home, and others. Coresight Research estimates around 15,000 stores are expected to close in the U.S., up from 7,325 last year. For context, that 15,000 figure would be the highest number of store closures seen since 2020. To that we can add, Nike’s NKE recent earnings call comment that “Over the next 2 quarters, NIKE will continue liquidating excess inventory through our value stores and select value partners.” We see TJX landing squarely in that “select value partners” bucket.

The Wall Street consensus price target for TJX shares is ~$140, but there are more than a few in the $145-$150 range. Based on expected EPS growth for this year to $4.50 from $4.26 last year, and to $4.96 next year, we find the implied multiples to be stretched slightly. Some may chalk up those higher targets to TJX’s penchant for delivering quarterly EPS beats, something it has done in 14 of the last 16 quarters. We would rather take a more conservative approach as we begin the Pro Portfolio’s position and scale into it using stock pullbacks or signs that overall consumer spending is holding up better than expected.

Based on our initial $137 price target and factoring in TJX’s dividend payments, we see a total return opportunity of around 12% today. That is leading us to begin this position with a Two rating. With support a few bucks below just below $122, we will keep a close watch on the shares and look to build this position over time, but in a way that will allow us to capture the H2 2025 EPS acceleration benefit.

In starting this new position, we will set an initial panic point at $109, and as the shares move higher, we intend to lift that level accordingly.

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(Please note that we are looking to execute these trades at or near the share price mentioned above. Once the trade is completed, subscribers can see the trade's executed price here. Be sure to toggle the chart next to the position’s ticker to sort by Purchase Date.)

At the time of publication, TheStreet Pro Portfolio had no positions in any securities mentioned.