The TJX Companies, Inc. (NYSE:TJX) and Ross Stores, Inc. (NASDAQ:ROST)’s shares have diverged in performance in 2026. Year-to-date, the former is down by 8.9% and the latter is up 30%. Cramer, on August 17th, discussed the divergence in the share price. He lamented the fact that The TJX Companies, Inc. (NYSE:TJX) was suffering despite performing well and discussed the firm’s CEO in relation to the share price movement. On the flipside, the CNBC TV host attributed Ross Stores, Inc. (NASDAQ:ROST)’s price performance to its CEO:
“Walmart and TJX, which are the acknowledged two best, have been the worst. And it’s really rather interesting to see the best trade, not really as well, like Ross Stores has a fantastic CEO, I don’t know if anyone remembers him from when he was at Boot Barn, Jim Conroy. But holy cow, is he good. And he has moved that stock up. . .Jim Conroy’s come in there and he’s just crushed it. In the meantime, TJX, which is doing so well as a company, people don’t like. So there’s a lot of front seat, back seat, Lowe’s better than Home Depot, Target better than Walmart, Ross better than TJX. Almost a change in the guard except for the fact that the guard isn’t as good.”
On the 19th, The TJX Companies, Inc. (NYSE:TJX)’s shares closed 4.2% lower after the firm reported its fiscal Q2 earnings in the morning. As is the case with other retailers, the firm’s narrative also surrounds the question of whether the current consumer weakness will affect its operations. During its fiscal Q2, The TJX Companies, Inc. (NYSE:TJX)’s comparable same-store sales grew by 4% and the firm also hiked its full year profit margin guidance to 11.2% and EPS to $4.09 to $4.13.
However, while the full year margin guidance was hiked, The TJX Companies, Inc. (NYSE:TJX)’s Q3 margin guide of 11.8% to 11.9%, which was rather tight and generated speculation about the possibility of heightened global shipping tightness and higher domestic wages affecting the firm’s stock. Additionally, the year-to-date price gains have also led to a forward P/E multiple of 27 which is at the high end of the historic range to leave little room for error. Similarly, The TJX Companies, Inc. (NYSE:TJX)’s Q3 EPS same store sales and EPS guides also missed estimates to hint that perhaps the troubles had already arrived.
Shifting to Ross Stores, Inc. (NASDAQ:ROST), while both it and Ross are off-price retailers, the latter’s shares have performed much better. The stock closed 4.4% higher on the 21st after the firm reported its earnings on the previous day. The results saw Ross Stores, Inc. (NASDAQ:ROST) beat revenue and earnings by a wide margin and grow its operating profit even if the impact of tariff refunds was excluded. Additionally, comparable store sales grew by a strong 10% and managed bumped up its full year earnings guide. At the same time, Ross Stores, Inc. (NASDAQ:ROST) can also suffer from rising domestic wage floors and non-discretionary inflation. If the firm sees comparable sales drop to the historic 3% to 4%, then the stock could encounter headwinds. Additionally, just as with TJX, the forward P/E multiple of 29.76 is at the high end of the historic range which leaves little room for error.
As for the hedge funds, interest in similar in both stocks as 83 out of the 1,021 funds part of Insider Monkey’s Q1 database had owned a stake in them. However, at 3.53%, Ross Stores, Inc. (NASDAQ:ROST)’s shares short as a percentage of float is higher than TJX’s 1.76%.
While Insider Monkey acknowledges the risk and potential of TJX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than TJX that has 100x upside potential, check out our report about the cheapest AI stock.
READ NEXT: Jim Cramer Draws the Line on NVIDIA in China: Why National Security Comes First and Jim Cramer Defends His Dell Stance as Investors Complain About Missing Out.
Disclosure: None.
