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Tuesday January 24, 2012
Two splits in retail: TJX & Ross
by Neil Macneale, editor 2-for-1 Stock Split Newsletter Our portfolio is comprised of stocks that have announced 2 for 1 stock splits. Here's a look at retailers TJX Companies (TJX) and Ross Stores (ROST). TJX, better known as TJ Maxx and Marshalls, is a discount retailer and is my pick for this month. Ross Stores (ROST), the #2 discount retailer in the U.S., was our portfolio purchase last month. TJX is #1 at about three times the size of Ross in sales and number of stores. Just because it’s bigger doesn’t necessarily mean it’s better but, in this case, it looks at least as good. Like Ross, TJX has outstanding returns on assets, investment, and equity; well above its peers and the overall market. For me, this indication of sound management is enough, but there is also well below market volatility, a reasonable dividend at 1.16%, and an average annual earnings growth rate of 18% over the last five years. One might question the wisdom of buying two such similar companies back-to-back. In this case, the fact that both companies are doing well and have seen fit to announce splits boosts my confidence that neither is a flash in the pan. Having positions in two companies that make such good sense in tough economic times will spread the risk in the event one or the other should stumble, however unlikely that may be. Learn more about this financial newsletter at Neil Macneale's 2-for-1 Stock Split Newsletter. 
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