TJX Stock and Other Off-Price Retailers Are Hard-to-Beat Bargains

TJ Maxx owner TJX will report results soon, followed by Ross Stores and Burlington. (Scott Olson/Getty Images)

There’s Love in the Time of Cholera, and then there’s TJ Maxx in the time of tariffs.

Second-quarter earnings season will get underway in earnest for retailers next week, and once again it looks like discounters are the place to be, even if the future looks uncertain.

TJ Maxx owner TJX will deliver results on Wednesday, followed by Ross Stores and Burlington Stores on Thursday, when bellwether Walmart will also report. Investors will undoubtedly be hungry for news: Although consumer sentiment has been rising this summer after half a year of declines, as Americans adjust to the reality of tariffs, those readings haven’t been fully capturing the mood of shoppers. Moreover, July’s surprisingly bad jobs report calls into question the strength of the labor market.

Off-price retailers aren’t immune to these concerns—worries that tariffs will hurt TJX’s profitability caused the industry leader to fall after its previous earnings report this spring—but they remain one of the best areas of retail at a time when consumers are still focused on getting the biggest bang for their buck. They’ve been taking market share for years from other retailers, a trend that many have only accelerated given Target’s recent woes, as some analysts see that big-box store’s customers shifting to discounters.

Consensus calls for TJX’s earnings per share to rise 5.4% for the second quarter, according to FactSet, with Burlington Stores notching a 7% gain. Only Ross Stores, the laggard of the group, is expected to see profits slip.

Bernstein analyst Aneesha Sherman is bullish, noting that off-pricers are “holding up fairly well against a tough macro backdrop,” leading her to predict the companies will see revenue growth and healthy traffic trends.

TJX and Burlington are her favorites: She rates both at Outperform, respective target prices of $145 and $365.

Both are still sourcing appealing merchandise, she writes: “While TJX continues to showcase premium brands across categories, Burlington is the biggest improver, adding more mainstream national brands that they didn’t have access to one to two years ago (e.g. Nike, Jordan, Adidas, Banana Republic, Calvin Klein, Michael Kors) and has almost closed the gap with Ross on quality of branded assortment.”

Sherman believes that Burlington is the most likely of the three to deliver an upside surprise in terms of the second quarter: The company was cautious with its commentary during the first quarter, but management has sounded more positive recently, mirroring stronger real-time data and her own store checks. Overall however, she thinks that the “story of the Off-Price Underdog’s transformation remains on track.”

That said, TJX is still “the most rock-solid” as it’s a “recession-proof trade down winner,” in her opinion. That’s no secret given the stock’s outperformance: Shares of TJX are up more than 8% since Barron’s recommended them in February, outperforming the S&P 500 and the SPDR S&P Retail exchange-traded fund, both of which are up just over 5%. With a multiple of nearly 30 times 2026 expected earnings per share, it is especially attractive to buy on any post-earnings dip, she notes.

Sherman is less confident about Ross Stores, which she rates at Market Perform, but thinks it too could have a good quarter: She doesn’t anticipate any surprises in terms of top- and bottom-line numbers and thinks the shares could get a short-term boost if Ross reinstates the full-year guidance it pulled in the first quarter.

Nonetheless, the outlook for the back half of the year might be murky across the group, given the shifting tariff landscape and tough comparisons to last year. She notes that depending on how management teams frame their outlook, and any third quarter-to-date trends caution about the second half of the year “might be taken as just conservatism versus something more structural.”

After many sometimes challenging years, the characters in Gabriel García Márquez’s novel eventually get their happy ending. Despite all the unknowns, off-price investors shouldn’t have to wait as long.

Write to Teresa Rivas at teresa.rivas@barrons.com