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Is Now The Time To Put TJX Companies (NYSE:TJX) On Your Watchlist?
It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like TJX Companies (NYSE:TJX). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide TJX Companies with the means to add long-term value to shareholders.
How Fast Is TJX Companies Growing?
Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. That makes EPS growth an attractive quality for any company. Shareholders will be happy to know that TJX Companies' EPS has grown 32% each year, compound, over three years. As a general rule, we'd say that if a company can keep up that sort of growth, shareholders will be beaming.
Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. It was a year of stability for TJX Companies as both revenue and EBIT margins remained have been flat over the past year. That's not a major concern but nor does it point to the long term growth we like to see.
Are TJX Companies Insiders Aligned With All Shareholders?
We would not expect to see insiders owning a large percentage of a US$97b company like TJX Companies. But we are reassured by the fact they have invested in the company. We note that their impressive stake in the company is worth US$138m. While that is a lot of skin in the game, we note this holding only totals to 0.1% of the business, which is a result of the company being so large. This still shows shareholders there is a degree of alignment between management and themselves.
Does TJX Companies Deserve A Spot On Your Watchlist?
For growth investors, TJX Companies' raw rate of earnings growth is a beacon in the night. With EPS growth rates like that, it's hardly surprising to see company higher-ups place confidence in the company through continuing to hold a significant investment. On the balance of its merits, solid EPS growth and company insiders who are aligned with the shareholders would indicate a business that is worthy of further research. It's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with TJX Companies , and understanding it should be part of your investment process.
Although TJX Companies certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see insider buying, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.