Is It Too Late to Buy TJX Companies?

You may feel like you've missed out on a stock if it's done particularly well. But you shouldn't necessarily take a pass, nor should you jump to buy merely because of past success.

An outsize stock price gain means a company has been successful. Of course, that doesn't guarantee the future.

Stockholders of retailer TJX Companies (NYSE: TJX) have been handsomely rewarded over the years. The share price has gained 312.3% over the past decade through April 22, easily besting the S&P 500 index's 239.4%.

Although you want to buy low and sell high, it's important to remember you're buying a part of a company that you'll hopefully hold for a long time.

With that in mind, has TJX Companies had its best days, or does the company still have a bright future that will drive continued market-beating returns?

Business prospects

TJX's brands, which include TJ Maxx, Marshalls, and HomeGoods, appeal to customers by offering merchandise at 20% to 60% discounts compared to the full retail price. How can the company do it? It opportunistically purchases excess inventory from wholesalers.

Naturally, buying goods at a bargain draws customers. But that's particularly true during difficult times when TJX's brands can purchase more inventory at attractive prices.

While many retailers have struggled to grow sales due to consumers facing challenging economic conditions like persistently high inflation, TJX continues sailing along.

All of its divisions posted positive same-store sales (comps). Fiscal 2026 comps increased 5% for the period ended on Jan. 31. This comes on the heels of a 4% gain the previous year. Management projects a 2% to 3% comps increase this year.

Image source: Getty Images.

Valuation

TJX isn't merely a mature company, either. Management still sees domestic and international expansion opportunities and has been increasing its store count. Last year, it added 129 locations, finishing the year with 5,214 stores.

Nonetheless, despite these growth prospects, the stock trades at a reasonable valuation compared to the overall market. The shares have a price-to-earnings (P/E) ratio of 32 versus the S&P 500's 31.

True, TJX currently trades at a higher P/E multiple than it historically has, with a 10-year median ratio of 19. Still, I think it's worth paying up for this growing retailer that continues executing through all phases of the economic cycle. And the stock is largely following the broader market in these boom times.

That's why, despite a more expensive valuation, I think TJX's stock still represents an attractive buying opportunity.

Lawrence Rothman, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends TJX Companies. The Motley Fool has a disclosure policy.