Why TJX is a top retail stock pick, analyst says

TJX Companies (TJX) is a clear "winner" as consumers hunt for deals, according to Bernstein analyst Aneesha Sherman.

Sherman told Yahoo Finance's Morning Brief that the off-price retailers focus on value gives the company a competitive advantage and enables it to "attract a higher-income consumer that is trading down from the department store."

"It's been this traditional off-pricer that's focused on value, but now it's branching out," Sherman told Yahoo Finance's Morning Brief. "It's one of the few stocks right now that is gaining consumers, gaining traffic, gaining market share."

For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.

This post was written by Angel Smith

Video transcript

Well, what is doing well in this economic environment seems to be these off price retailers here.

Aha.

We got TJ X earnings out recently a very, very strong quarter from the company.

You have an outperform reading on the stock.

Do you think TJ X is gonna be able to hold on to its premium valuation?

And and what is going to keep that momentum going?

TJ X is a different company than it was 10 years ago or even five years ago.

Um You know, it's been this traditional off price so that's focused on value, but now it's branching out and it's it's it's still delivering value, but it's delivering value at more premium price points.

If you walk into a TJ Maxx today, you'll find $2000 luxury handbags, you'll find 800 to $1000 luggage, you'll find high end Estee Lauder and other high end brands of cosmetics.

These are not products you would find there 10 years.

So they have tried to attract a higher income consumer that is trading down from the department stores into a more value channel.

Um and it's working.

So I think that we will hold on to its premium valuation because it's one of the few stocks right now that is gaining consumers, gaining traffic, gaining market share, posting positive comps in a second straight year in a row in the midst of this economic environment and clearly taking share from everything else in vertical retail and in department stores.