TJX Companies: One of the Best Stocks (and Most Boring) in the Marketplace

TJX CompaniesAlmost as good as owning a company that’s gone up in value multiple times on the stock market is discovering and learning from many of the best stocks that have already done so. I’ve learned over the years never to fight the stock market; just try to find the best stocks that are out there. Just like in any Main Street business, if you want to be successful, you have to do what works.

When Internet-related stocks were hot, this was the place to be as a stock market speculator. They were the best stocks at that time. It doesn’t matter that they were overvalued and over hyped; if you got out before the bubble burst, you were laughing. The same thing happened to U.S.-listed Chinese stocks, solar energy stocks, and then mining stocks. If you’re speculating in the stock market, you just have to do what works. In other words, don’t fight the tape; just try to own the best stocks the market has to offer. What transpires might be crazy and irrational, but that’s the nature of the stock market. Value and market capitalization in a secondary market are only relative (a secondary market is what the stock market really is; the early owners already sold a portion of their shares). In this system, there is no right value for an enterprise, just a perceived one.

I always make a practice of identifying and researching the best stocks in the marketplace. No matter whether it’s a bull market or a bear market. It’s like playing golf; the only way to get better at it is to practice. I can’t always own the best stocks in the marketplace, but if I see a stock that’s done great, I want to know why. I find this a useful way to hone stock-picking skills in an environment where, basically, everything’s a crapshoot at best.

For a while now, I’ve been following a “boring” company called The TJX Companies, Inc. (NYSE/TJX). This company has done extremely well on the stock market for a number of years now and I absolutely kick myself that I didn’t buy the stock. As a corporate entity, this is a business that you probably have never heard of; the company is a major retailer of what is known as “off-price” clothing. The stock is what I consider to be (or has been) one of the best stocks in the retail/department store industry. It’s a case of being in the right business, selling the right brands at the right price, all at the right time.

TJX Companies operates T.J. Maxx, Marshalls, and HomeGoods in the U.S. market; Winners, HomeSense, and Marshalls in Canada; and T.K. Maxx and HomeSense in Europe. The company’s business goal is to sell brand-name merchandise at prices from 20% to 60% less than major department or specialty stores. Talk about being in the right business at the right time; this company has so far played the recession and the age of austerity just about perfectly.

Pull up a long-term chart on TJX and you’ll see how the stock appreciated from a split-adjusted $4.00 per share in 2000 to its current record high price of around $38.00 per share (the stock just split two-for-one again in February). The stock really accelerated after the low set in March 2009; all the while the company was reporting great financial results and increasing its dividends to shareholders. As a comparison, the S&P 500 Index is still down slightly from the 2000 mark.

I really missed the boat on what has been one of the best stocks in the retail sector and the stock market. Worse, according to the TJX’s track record on the stock market, its returns have been consistent, with very little downside. All this while the rest of the stock market floundered.

This stock is comparable to another one of the best stocks in the equity market. McDonald’s Corporation (NYSE/MCD) executed a similar business strategy in the food service industry and its stock market performance has been excellent. (See Not Interested in Large-cap Stocks? Why You Should Be.)

The lesson from all this? The best stocks in the marketplace are out there right now, benefitting from the times we’re in. All you have to do is always be researching the stock market and always be asking the right questions: Which companies are benefitting from the turmoil we’re in today? Which companies will flourish in the times ahead? Do I own the best stocks in the marketplace right now? It isn’t complicated, but it sure isn’t easy.