5 Most Undervalued Retail Stocks to Buy According to Hedge Funds

In this article, we discuss 5 most undervalued retail stocks to buy according to hedge funds. If you want to see more stocks in this selection, check out 12 Most Undervalued Retail Stocks to Buy According to Hedge Funds.

5. The TJX Companies, Inc. (NYSE:TJX)

Number of Hedge Fund Holders: 55
P/E Ratio as of January 23: 27.68x

Return since January 23: 4%

The TJX Companies, Inc. (NYSE:TJX) is the off-price retailer of apparel and home fashions in the United States and worldwide.

The TJX Companies, Inc. (NYSE:TJX) ranks 5 on our list of 12 most undervalued retail stocks to buy according to hedge funds. The company has announced its sales and operating results for Q3 2023. Its net sales for the period came at $12.2 billion, exhibiting 3% decline against Q3 2022. U.S. comparable store sales surpassed the company’s expectations, and overall pretax margin, merchandise margin, and EPS remained strong.

The company believes that its flexible business model and value proposition should offer tremendous advantages. For Q4 2023, it expects pretax profit margin to be 9.5%- 9.8% and diluted EPS of $0.85 – $0.89. For the full year, it continues to maintain the high-end of its outlook for adjusted pre-tax profit margin. The TJX Companies, Inc. (NYSE:TJX) expects pre-tax profit margin to be in the range of 9.3%- 9.4% and adjusted pre-tax profit margin of 9.8%- 9.9%.

On December 6, Cowen analyst John Kernan upped the price objective on the shares of The TJX Companies, Inc. (NYSE:TJX) to $85 from $84, keeping an “Outperform”. The analyst said that the company’s opportunities across apparel, footwear, accessories, home, beauty, and kids continue to improve.

As of the end of the third quarter, 55 hedge funds tracked by Insider Monkey had stakes in The TJX Companies, Inc. (NYSE:TJX), compared to 49 funds in the previous quarter. The total value of these stakes was $1.90 billion.

Madison Funds, managed by Madison Investment Management, recently commented about The TJX Companies, Inc. (NYSE:TJX) in their fourth-quarter 2022 investor letter. Here is what the fund has to say:

“In the fourth quarter, the Consumer Discretionary sector was the largest positive contributor to our relative performance, in part driven by contributions from The TJX Companies, Inc. (NYSE:TJX). TJX is a leading off-price apparel and home goods retailer. After a couple of years of bumpy performance due to closing stores during the height of the pandemic and absorbing rising supply chain costs, sales and margins have reverted towards more normal levels. We believe TJX’s consumer value proposition remains terrific and they will continue to gobble up market share from department stores over the long term.”