TJX Companies - Buy, Sell or Hold?

The stock price of TJX Companies (TJX), an off-price retailer of apparel and home fashions, is currently on the upside.The following price chart shows that TJX has risen steadily from $15.86 on March 3, 2003 to an all-time high of $24.55 on March 5, 2004, the date of this analysis.

The percentage gain of 55.18%, ($24.55-$15.86)/$15.86, for the current upside is much less than the gains for the two previous TJX upsides. The 2000 - 2002 upside had a total gain of 182.45% from the bottom to the peak. The 1998 to 1999 upside gained 132.66%. The average daily gain (total gain/duration) for the current upside is 0.15% (55.18%/368), which is much less than the average daily gain of 0.28% and 0.69% for the two previous upsides. The relative low daily percent gain for the current upside suggests that the demand for the stock is not as strong as compared to the two previous upsides.

Price Channel of the Current Upside

Prices of the current upside are in a well-defined price channel as shown on the next chart.

Prices routinely move to the top boundary of the channel and then move down to touch the lower boundary of the channel. Notice that the actual prices in blue lie within the upper and lower parallel boundaries of the price channel.

Six Month Price Projection

Where will the price be in six months? If you assume prices remain in the current price channel through August 31, 2004, the best possible price is $28, the upper boundary of price channel. The worst possible price is $22, the lower boundary of the price channel. Note: The orange dashed prices simply illustrate one possible price pattern. These prices do not represent an actual projection of prices.

Obviously prices could break out of the current price channel on good news from the company or the if the overall market goes up. Or prices could drop below the price channel on bad news.

TJX: Buy, Sell or Hold?

I would not buy TJX at the current price. The stock price is at the upper range of it's price channel and I expect it to pull back in the short term. While I advocate that you should buy on the upside, I also say that you should not pay too much.

If you own the stock, should you sell it? The chart indicates a slow but steady growth to possibly $28 by the end of August 2004. But with the stock price at almost $25, there's not much upside left. Therefore, consider selling all or some of your shares. Of course, if you want to try to capture the last few dollars of gain, hold some shares and hope the price gets to to $28.