Consumer spending may be slowing… but it’s also a huge chunk of the economy. And no matter how bad things slow down, there are still many goods that people will need to buy.
That may be bad news for those who make higher-end goods. Ultra-wealthy consumer unaffected by the economy can only buy so much for themselves. That leaves companies that offer the best bargains for consumers as the top way to play current economic trends.
For the apparel space, off-price retailers offering quality fashions at a discount could continue to increase market share. That’s good news for companies like TJX (TJX), owner of T.J. Maxx and Marshalls, among others.
The stock is already up 16 percent over the past year. Revenues and earnings are rising, and the company has a healthy balance sheet with enough cash to weather any short-term economic slowdown. That’s a good sign the company can continue to thrive, even in a slowing economy.
Action to take: Investors may like shares at current prices or on any drop lower. TJX has raised its dividend, and shares now yield 1.7 percent, with room for further growth higher over time.
For traders, the July $80 calls, last going for about $2.70, offer mid-double-digit returns in the coming months on a rally higher for TJX shares.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.