Ross Stores, Inc. (ROST), The TJX Companies, Inc. (TJX): Specialty Retail’s Best Kept Secret

The apparel industry should be just one of the benefactors of a rebounding economy. I believe that “value priced” retailers could be the best-in-industry performers given their advantages, including their attractive discount pricing and ability to quickly move in and out of product categories based on customer demand.

There has also been a reduction in take home pay as a result of the payroll tax holiday expiration, which should play a role in how consumers shop, thereby, leading consumers to continue looking for value price apparel. Two of the top companies operating in this specialty retail segment are Ross Stores, Inc. (NASDAQ:ROST) and The TJX Companies, Inc. (NYSE:TJX).

Ross Stores, Inc. (NASDAQ:ROST) operates two brands of off-price retail apparel and home fashion stores, Ross Stores, Inc. (NASDAQ:ROST) Dress for Less and dd’s DISCOUNTS. Ross Stores, Inc. (NASDAQ:ROST) posted 2% higher March same-store sales and 6% higher total sales on a year over year basis, while also reiterating its forecast of a 5% to 6% increase in April same-store sales. Meanwhile, Ross Stores, Inc. (NASDAQ:ROST) plans to open 60 Ross Dress for Less and 20 dd’s DISCOUNTS stores in 2012.

Ross Stores, Inc. (NASDAQ:ROST) has also been seeing solid performance in its West Coast operations given favorable weather. This includes California, the Southwest and Pacific Northwest areas where over 60% of its stores are located.

At the end of 2012, there were 30 hedge funds owning Ross, which was an increase of 7% from the number of hedge fund owners at the end of the third quarter. Most notably, Ross’ top hedge fund owner by market value was billionaire Jim Simons’ of Renaissance Technologies (check out Simons’ cheap picks).