As consumer confidence dips, off-price retailer TJX remains a top stock to own

We know many of the shoppers who frequent TJX Companies ‘ off-price chains love treasure hunting. What entices them to keep coming back for all those discounted designer clothes and trendy home furnishings, however, is something less talked about and works even in tough economic times. According to UBS analyst Jay Sole, it is TJX’s strong relationships with 21,000 vendors around the globe that allow it to get the best deals on merchandise for its stores, which includes T.J. Maxx, Marshalls, and HomeGoods. “For a lot of vendors, TJX is their biggest customer,” Sole told CNBC at last week’s UBS consumer and retail conference in New York City. “They want to grow with a company like TJX that’s winning and taking market share, especially if some of their other retail partners are losing market share.” Sole, who covers TJX, has a buy rating on the stock and a $151 price target. TJX benefits when retailers need to unload excess inventory to generate cash and mitigate losses. “A lot of public companies are aggressive on cutting merchandise in advance because they have to grow their earnings,” said TJX CEO Ernie Herrman during the company’s earnings call on Feb. 26. This trend has been intensified by a slowdown in consumer sentiment. The University of Michigan’s preliminary March index fell to 57.9 — a 10.5% drop from the prior month and a 21% decline year over year as Americans expect a higher rate of inflation within the next year driven by higher prices from tariffs imposed and threatened by President Donald Trump . While this presents challenges for retailers, it has created an opportunity for TJX’s buyers to secure high-quality inventory at better margins, an advantage that “tends to work pretty well for TJX,” Herrman said. TJX YTD mountain TJX Companies TYD Jim Cramer has long touted the TJX’s vendor relationships as a strength no peer can match. It’s one of the main reasons why it’s one of Jim’s favorite stocks to buy right now . During the March Monthly Meeting , he said store closures and high levels of excess inventory bogging down the likes of Kohl’s and Macy’s is what determines the stock’s upward trajectory. Shares of TJX have lost more than 5% year-to-date — a little worse than the broader market but much better than the basket of retail stocks in the XRT exchange-traded fund, which has dropped 13% in 2025. TJX is one of our 12 core portfolio holdings. We increased our price target to $140 per share after TJX delivered a better-than-expected quarterly report in late February. We kept our 2 rating . Secret sauce So how does TJX do it? As retailers offload excess inventory— a trend that’s accelerating as consumer confidence dives — TJX swoops in to buy the highest-quality stuff at cheap prices. These elements “tend to work pretty well for TJX,” Herrman said during February’s post-earnings call. TJX’s size also gives it more buying power and a negotiating edge over its off-price peers. The company posted $56.4 billion in net sales in 2024, the company’s fiscal 2024. That’s nearly double its next two competitors, Ross Stores and Burlington , which last year generated $21 billion and $10.6 billion in sales, respectively. TJX’s market dominance enables it “to make sure they can create win-win situations where the vendors are still happy to work with them and they’re still able to get inventory at the price they need to offer great value to the consumer,” Sole explained. Analysts at Morgan Stanley agree. In a note Friday, they said TJX’s ability to purchase new inventory and quickly convert it into sales is a key part of the company’s unique moat, or competitive advantage, that “enables opportunistic buying.” During the analysts’ recent meeting with TJX management, the retailer’s executives emphasized that its “importance to vendors has grown considerably over the past few years.” Morgan Stanley described TJX as offering “simple” and “consistent” relationships with vendors that don’t include advertising or markdown dollars, inventory takebacks, and no issues with late payments. “As a result, TJX is sometimes able to negotiate better margin,” analysts said — adding “this negotiating power likely only grows with further scale.” That growth is steadily taking shape as TJX recently increased its long-term store target of 7,000. TJX’s core market is the United States, with locations in all 50 states — plus Washington D.C., and Puerto Rico. But it also has stores in Canada, Australia, and Northern Europe. It recently expanded into the Middle East and Mexico through partnerships and has plans to open new stores in Spain in early 2026. TJX also uses a “roll-up strategy,” wherein the company partners with local businesses to offer its expertise in supply chain and inventory management. TJX takes a stake in these businesses and benefits from their growth. Last year, TJX announced a pair of joint ventures with international off-price retailers: Mexico’s Grupo Axo and Dubai-based Brands for Less. “This can help local businesses grow but also help TJX ultimately make money and expand all over the world,” UBS’ Sole said. TJX’s Herrman has previously called the company’s merchandising talent the “secret sauce” that sweetens these kinds of investments during the company’s post-earnings call last August. Morgan Stanley, for its part, concluded that TJX is a “scarce, high-quality retail investment option” that has room for higher profits in the future. Analysts have a buy-equivalent overweight rating on the stock and a price targe t of $136 per share. In a separate note Friday, Goldman Sachs characterized TJX as being “the most defensive” in the off-price sector. While the overall retail industry has been hard hit by tariff concerns, economic uncertainty, and the health of consumer spending, Goldman continues to see the consumer as a “source of strength” and remains “constructive on off-price.” Analysts find TJX as a defensive stock that can be bought to protect against economic downside. They have a buy rating and price target of $142 on the stock. However, if the U.S. economy goes into a recession, TJX “won’t be able to maintain the same-store sales growth rate,” UBS’ Sole explained. Still, TJX tends to have a more consistent performance than your typical retail stock and can steal share in any economic environment, even in a weaker scenario. “If the economy is weak, maybe some of their core customers pull back a little bit, but then they gain new customers from other customers trading down,” according to Sole. (Jim Cramer’s Charitable Trust is long TJX. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . 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A sign hangs at the entrance of a T. J. Maxx store on February 28, 2024 in Chicago, Illinois.

Scott Olson | Getty Images

We know many of the shoppers who frequent TJX Companies‘ off-price chains love treasure hunting.

What entices them to keep coming back for all those discounted designer clothes and trendy home furnishings, however, is something less talked about and works even in tough economic times.