Attention, Sears shoppers: Go to TJX
The old-time retailer was hot in its day, but that was long ago.
By Bill Gunderson
It was the Amazon.com (AMZN) of its day. Shoppers could buy goods through its revolutionary mail-order catalog. In fact, it was the largest mail-order and merchandising company in the United States for more than 60 years.
It owned the tallest building in the world, at 108 stories. But by 1995, there were no Sears (SHLD) employees to be found in the Sears Tower, despite its being the company's headquarters at one time. It is no longer the Sears Tower -- the company lost the naming rights in 2003, and the nation's tallest building is now called the Willis Tower.
Sears was kicked out of the Dow Jones Industrial Average ($INDU) back in 1999, and it is now being removed from the S&P 500 ($INX). This is the same index that added Monster Beverage (MNST) to the index just a few weeks back.
There is a very important lesson for individual investors to learn from this story.
It is better to own the Best Stocks Now, not the best stocks of yesteryear. Take note, all of you Cisco (CSCO), GE (GE), Hewlett-Packard (HPQ), JCPenney (JCP) and other stodgy old stocks of yesteryear devotees. Companies have life cycles. You want to own them in the prime of their life, not when they are way past their prime.
As a professional money manager, I can almost predict what stocks are held in a portfolio that is transferring to me from one of the big wire-house firms. In fact, I recently wrote an article about this for The Street: The Best Stocks to Own (Hint: They Are Not the Most Widely Held).
Like the "Carnak the Magnificent" skit on the old Johnny Carson show, I can usually hold their statements up to my forehead and see GE, Johnson & Johnson, Microsoft, Intel and Cisco before I even open it up.
Why? I guess it is because these household names are like a big fuzzy blanket wrapped around nervous investors.
Now, having said this, GE was once one of the best stocks in the market, as were Johnson & Johnson, Cisco and Microsoft. A lot of money was made in those stocks during their day.
The problem is that their day came and went a long time ago. Again, the trick is to own stocks in their prime.
What are some of the Best Stocks Now? Let's consider TJX (TJX), whose stores include retailer TJ Maxx. I have owned it for a long time.
This company is now a $35 billion company. It passed Sears a long time ago in size. Consider that Sears now also includes K-Mart. Attention Sears Holding shoppers!
Here is the performance of TJX over the short term, intermediate term and long term.
When I compare TJX with the 2,935 stocks in my database, it gets a performance grade of "A." Bravo!
Compare the performance of TJX with Sears Holding:
I am one of those hybrid investors who like to combine performance with value. Pure value investing leads to way too many value traps. Pure performance investing ignores value.
So then, what does the valuation of TJX look like right now?
OK, TJX is not the cheapest stock right now, but filet mignon is not cheap either. I paid $17 a pound for a nice 8 oz. piece from my supermarket the other day. Ground chuck was a lot cheaper.
When I take the performance and the valuation of TJX together and compare against all of the other stocks in my database, it comes in at #120 and earns an overall grade of A-.
At any given time, I like to select from the top 200 stocks in the market. My final roster only has room for 25 players.
That is why I own TJX in the Conservative Growth portfolios that I manage. I doubt Sears Holdings will crack my top 200 any time soon.
More from TheStreet.com
We won't miss "you" Sears, we will miss the era when quality could be counted on. we won't miss lowlife garbage with degrees hired-in to play management when you lack commonsense and any idea of who shops in your stores and what makes them buy. We won't miss the lack of respect for long-time personnel by hired-in HR trash that literally finds ways to get rid of older personnel to replace them with newbies who are afraid of you and can be bullied. We saw it all during this era, an era we all want to put behind us.
Sears... if he were alive, his stores would still be thriving but he isn't, neither are you. Been in a K-Mart lately? Wow... it doesn't get any more neglected.
Wow alot of comments on here from people who have no Idea what Sears is all about. I work at Sears and have for the past 8 years and these are the facts...
1.Sears has the largest repair business in the world.It is NOT going out of business ( @
Don't be so quick to bad mouth Sears.
Sears gets my business because it is patriotic and assists families of deployed military. Case in point: if you were a Sears, employee before being activated, your family received the difference between your service pay and what you earned from Sears, until you return from deployment. When you return, you were reinserted into the job slot you would have been in, including promotions, had you not deployed.
I will support Sears as long as it exhibits such patriotism.
Sears is still an admirable company in many ways - and the country would be better off if they made a turnaround. One of things that Sears still does is support our members of the military. For decades, whenever a Sears employee was called up for National Guard duty - the company would supplement their guard pay - back up to their normal pay rate, so that the family of that employee did not suffer.
Being tied to older malls is definitely an issue, sometimes the service is lacking as well, but Sears still has some strong points. I've had 30 year-old Craftsman tools that still get repaired or replaced for free. Their appliance department is top notch in many areas - and they have PARTS and SERVICE for those appliances.
O.K., I GREW UP A SEARS KID WITH EVERY PIECE OF CLOTHING ON MY BODY FROM SEARS. YES, THE WAY THEY OPERATE MAY BE OUT DATED BUT REMEMBER HOW MANY PEOPLE SEARS EMPLOYED IN ITS HEYDAY. MOST SMALL TOWNS HAD A SEARS STORE IN WHICH TO ORDER OR PICK UP AN ORDER WHICH HAD PLENTY OF EXCITMENT AS A KID BECAUSE IT WASN'T A " I SEE IT NOW, I BUY IT NOW".
MANY BABY BOOMERS REMEMBER THE THRILL OF GOING THROUGH THE PAGES OF A SEARS CATALOG AND HOPEING AND WISHING FOR A CERTAIN ITEM FOR CHRISTMAS. I'VE HAD GREAT CHILDHOOD MEMORIES OF SEARS AND I HOPE THEY PULL OUT OF THEIR NOSE DIVE.
Instead of always predicting the next company to divest or is not a good NYSE purchase how about we start talking about the fact that the NYSE has become an outdated business model that is long past it's prime and relevance?
It is responsible for most of the negative factors in our modern economy and it only contributes to the demise of the American economy. Let's talk about speculators that do nothing for our economy except increase the price of goods and services to create more wealth? No jobs, just wealth for the few.
How about we discuss that Wall Street is responsible with the Banks of the US for the "Great Depression" and the most recent economic collapse that had to be propped up by you the Tax payer to avoid total economic chaos worldwide!
Sears may be a questionable company in its sunset of life, but the NYSE has long since lost its relevance to anyone but the insiders perpetrating the continuing lie.
I'll give you a lifecycle, dumb***; Sears started and created the foundation for this country’s economic power. The company has been around since the 1800s and with the introduction of railroads created a easy way for people to shop using a catalog, which was the Internet of its time. Show some respect for a company that have been around the block many times.
Sears started as the first internet shopping store -- only they used snail mail instead of the internet
seems like if Sears had gone back to it's roots and put it's mail order catalog on the internet instead of getting rid of it as a waste of money
they would now be number one ahead of amazon and facebook and google
I have worked with Sears Corp and its no wonder the company is in the toilet. they aren't retailers, but a bunch of Hedge fund guys that make every negoitation impossible and they always want something and have no practical experence, but to screw you.
Copyright © 2014 Microsoft. All rights reserved.
Serious issues like drought and the deterioration of the developed world spell opportunity for this industry leader.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.