Our portfolio is comprised of stocks that have announced 2-for-1 stock splits. Each month, we look at all of the companies that have announced splits, and then based on their fundamentals, we select one to add to our model portfolio.

Here's a look at our last two portfolio editions -- retailers TJX Companies (TJX) and Ross Stores (ROST). We recommend purchase of both.

TJX, better known as TJ Maxx and Marshalls, is a discount retailer and is my pick for this month. Ross Stores, the #2 discount retailer in the U.S., was our portfolio purchase last month and continues to rate a buy.

ROST is a growth stock with several value stock characteristics boosting its score on the 2 for 1 ranking formula.

Its 17.2 PE is lower than the 20.1 average PE for the S&P 500 and is certainly very reasonable for a stock producing a 27.7% average earnings growth rate over the last five years.

TJX is No.1 at about three times the size of Ross in sales and number of stores. Just because it's bigger doesn't necessarily mean it's better, but in this case, it looks at least as good.

Like Ross, TJX has outstanding returns on assets, investment, and equity; well above its peers and the overall market.

For me, this indication of sound management is enough, but at TJX there is also well below market volatility, a reasonable dividend at 1.16%, and an average annual earnings growth rate of 18% over the last five years.

One might question the wisdom of buying two such similar companies back-to-back. In this case, the fact that both companies are doing well and have seen fit to announce splits boosts my confidence that neither is a flash in the pan.

Having positions in two companies that make such good sense in tough economic times will spread the risk in the event one or the other should stumble, however unlikely that may be.

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