Stock Watch
TJX Companies: Money Machine
This retailer of discount clothing is draped in cash.
January 19, 2004
TJX Companies (TJX) knows there is big money to be made in discounting. The retailer owns the two largest off-price-clothing stores in the country -- T.J. Maxx and Marshalls.
With more than 1,860 stores in the United States, Canada and Europe, TJX pulled in more than $13 billion in sales last year and should be able to boost that figure by 12% this year, says Value Line. In December, the company broadened its reach further by acquiring Bob's Stores, a Northeastern value retail chain. The purchase should help drive sales growth over the long-term.
TJX is a favorite of Kent Simons and Bob Corman, managers of Neuberger Berman Focus fund (NBSSX). The retailer, says Simons, "is a money machine." It generates substantial free cash flow (cash left after capital expenditures needed to maintain the businesses), repurchases $500 million of its own shares yearly and has seen earnings grow 40% per year compounded over the past five years.
The stock, at $24, trades at 17 times the 2004 consensus profit estimate of $1.42 per share.
--Brian Knestout