Profit With the Shift to Cost-Conscious Consumers

Consumer spending has been declining. That bodes poorly for most retail stocks from here. However, not all retail stocks are created equal. Some retailers can thrive in a challenging environment.

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  • Specifically, companies that cater to cost-conscious consumers. Even with tight budgets, those looking for a deal and seeing price tags with steep discounts on them will likely continue to flock to companies that continue to have massive deals.

    One company that could hold up well amid slowing consumer spending is TJX (TJX). The discount retailer does a fantastic job of keeping shoppers coming back to look for deals.

    TJX isn’t immune to recent trends. Their most recent same-store sales growth projections came in lower than expected. But the company did beat on overall earnings and raised their guidance for the full year 2024.

    Over the last 12 months, revenues are still up 13%, and earnings are up 35%. And shares are valued about in-line with the overall stock market.

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  • Action to take: Investors may like shares here or on any drop lower. TJX has a business model poised to continue profiting in a dour spending environment like today’s.

    For traders, shares are tending higher, and the stock has made a new 52-week high. The July $110 calls, last trading for about $0.70, could see mid-to-high double-digit returns in the coming weeks on the back of a continued uptrend.

     

    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.

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