Discount retailer TJX Companies is one of the stocks bucking this year’s negative trend.

The TJ Maxx and Marshalls parent is benefitting from a weakening consumer outlook, as more customers trade down to its off-price catalogue in search of value. Discount chains like TJX are poised to gain momentum in this tariff-ridden environment because they can play to their strengths in terms of inventory and sourcing.

One of the more diversified retailers, TJX often obtains its clothing products, accessories, and other merchandise from U.S. intermediaries, an approach which enables the company to bypass much of the tariff-related downside in the short-term.

According to a recent filing, TJX bought products from more than 21,000 vendors spread across more than 100 countries over the past year, with less than 10% of the merchandise for its domestic business imported from China.

With rival retailers struggling as tariffs are set to result in higher clothing and shoe prices, off-price retailers should gain as they are able to offer substantial discounts for their lower-priced merchandise. Another benefit for discount retailers is the fact that they tend to maintain lower inventory levels relative to traditional retailers.

TJX Stock Breaks Out to All-Time High

Given the retailer’s advantaged position, it’s no surprise that TJX TJX stock is flourishing this year. Earlier in April, analysts at Citigroup upgraded TJX to buy from neutral, stating that consumers are more likely to purchase its products at “attractive prices.”

While other retail companies have faced store closures and recent bankruptcies, TJX is pressing ahead with its expansion efforts. Last year, the company achieved a major milestone with the opening of its 5,000^th store.

TJX stock has advanced nearly 9% year-to-date, all while the general market remains in a steep correction. Shares have risen more than 40% over the past year.

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The stock remains above key technical levels. The 50-day and 200-day moving averages are upward-sloping, and shares continue to make a pattern of higher highs.

Currently a Zacks Rank #3 (Hold), TJX has exceeded the earnings mark in each of the past twelve quarters. Back in February, the discount retailer reported fourth-quarter earnings of $1.23 per share, reflecting a 6% beat versus consensus estimates. TJX has delivered a trailing four-quarter average earnings surprise of 5.5%.

The company also surpassed revenue estimates during the fourth quarter, reporting strong sales of $16.35 billion from its TJ Maxx, Marshalls, HomeGoods, and other retail brands. TJX is slated to report its Q1 results in May.

Bottom Line

Every year brings a different market theme, and it’s our job to identify that theme and position our portfolios to benefit from it. President Trump’s tariff playbook has tilted the retail environment in favor of companies like TJX that have advantages with inventory management and sourcing.

TJX is also ranked favorably by our Zacks Growth Style Score with a best-in-class ‘A’ rating, indicating further upside remains likely based on promising earnings and sales growth metrics. Be sure to take advantage of all that Zacks has to offer to uncover leading stocks like TJX.

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This article originally published on Zacks Investment Research (zacks.com).

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