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This Retailer Is About to Take Off

With the U.S. opening up for business, expect a short-term shift to old fashioned brick and mortar sales. TJX should benefit in a big way.
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It's no surprise that online retail has exploded during the COVID-19 pandemic. For example, in its most recent quarter, Best Buy (BBY) saw a 154% increase in online sales. Target (TGT) posted a 141% jump, and Walmart (WMT) announced a 74% increase in e-commerce sales.

However, for some folks, there is no substitute for the in-person shopping experience. That's especially true when it comes to clothes. You really don't know how that item will look on you until you try it on.

With the U.S. opening up for business, I'm expecting a short-term shift to old fashioned brick and mortar sales. Just imagine the pent-up demand for in-person shopping from clothing afficionados.

While all retailers have an online presence, there are those that focus on in-person sales. One such name is TJX Companies (TJX) , parent company of the popular TJ Maxx store chain.

The TJX formula is quality at a reasonable price. The retailer, which is an Action Alerts PLUS holding, does this by taking advantage of special situations, such as canceled orders. Because of this, shoppers never know exactly what they'll find, and that's part of the appeal. It's like a treasure hunt.

With all the disruption currently occurring in the economy, many order cancellations are bound to occur. Entire chains, some in trouble before the appearance of the virus, might fail to emerge from the anticipated recession.

The coming wave of cancellations will allow TJX to acquire its products at even lower prices. I anticipate an accompanying boost in margins.

TJX's chart indicates that good things are about to happen for the fashion retailer. The stock has just broken out of an ascending triangle (black dotted lines). This bullish pattern projects a return for the stock to its 52-week high of $64.95, set in late February.

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There is anecdotal evidence that the above scenario has already started to unfold. When the company released its earnings report last week, it stated the following:

"Initial sales overall have been above last year's sales across all states and countries for the over 1100 stores that have reopened for at least a week."

The company started reopening its stores on May 2. As of May 21, it had reopened 1600 locations. All stores should be reopened by the end of June.

We're buying TJX right here, as the stock's technicals line up seamlessly with the company's current bullish situation.

At the time of publication, Ponsi was long TJX.

Action Alerts PLUS, which Cramer manages as a charitable trust, is long TJX.