Consumer spending has slowed down in January. Given that the start of a new year means the end of the holiday season, some slowdown isn’t a surprise. But for fearful investors, it may be time to look for retailers that can continue to bring in money from shoppers.
One way to keep buyers coming is to create bargains that bring investors back time and again. One small niche of the retail space uses deep discounting to provide such deals.
That may be why The TJX Companies (TJX), parent of T.J. Maxx, has seen shares double over the past five years. The off-price retailer keeps its inventories repeatedly moving, bringing shoppers back time and time again.
As shoppers look for bargains, TJX could continue to be a winner. While operations have seen slow growth, with earnings up 9% and revenues up 6%, that could still be better than other retailers as consumers slow down in the post-holiday era.
Action to take: Momentum investors may like shares here, for further gains, especially as TJX has a strong chance to buck a more sustained slowdown in retail spending.
At current prices, shares pay a 1.2% dividend.
For traders, the April $130 calls, last trading for about $1.55, could see mid-double-digit returns from a further trend higher in the weeks ahead.
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 company mentioned in this article.