Attention, Sears shoppers: Go to TJX

The old-time retailer was hot in its day, but that was long ago.

By TheStreet Staff Sep 5, 2012 11:54AM

Sears store in Milford, Connecticut Spencer Platt, Getty Images


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.

TheStreet.com TJX 1

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.

TheStreet.com TJX 2

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:

TheStreet.com TJX 3

Yecch!

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?

TheStreet.com TJX 4OK, 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-.

TheStreet.com TJX 5 

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

 

185Comments
Sep 5, 2012 2:36PM
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I would agree with this assessment. Sears itself wasn't to blame, it's HIRED-IN management did the lazy thing and filled the shelves with cheap knock-offs of cheap knock-offs with formerly quality brand tags on them. It followed instead of carefully planned it's own path. Failure will take down a few icons... Craftsman tools were great, now foreign-made and more crapsman. Kenmore was as popular and reliable a brand as they come, now just another cheaply made appliance that will be failing just after the warranty expires.
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.

Sep 6, 2012 3:15AM
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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 ( @

Ex employee 140) In Fact Sears is THE Appliance service provider for not only Sears but for stores like Lowes and Home Depot as well.
2. Sears is the Biggest home appliance retailer in the U.S. (and its not even close people)
3.Sears is the largest mattress retailer in the U.S.
4.Sears (Craftsman brand) sells the most lawn and garden equipment in the U.S. (I.E. lawnmowers,riding mowers,Trimmers ect)
5.Craftsman Brand is the #1 Brand of tools
6.Kenmore is the #1 Brand of appliances (1 out of every 2 homes in America has at least 1 Kenmore appliance in it).
7. Sears did not raise your interest rate on your credit card...Citibank did (they run our credit cards)
8.The Craftsman tool warranty has NOT CHANGED.Sears still warrantys hand tools FOREVER!
9.Sears has the lowest price on EVERYTHING,EVERYDAY! Sears has a price match policy that not only matches but also gets you 10% of the differance if Sears is higher...just ask!
10. Sears has the best customer rewards plan in the retail Industry...not only do we beat the other stores best price, you can earn free money on EVERYTHING you buy at Sears/K-Mart with our shop-your-way-rewards. (yes i said EVERYTHING..home improvement and service too!)
11. Sears takes care of our Veterens and their job/benefits are waiting for them when they complete service...any other retailers do that?
 
Sears is not a perfect company, but my God people Sears is not the Anti-Christ niether.Stop posting blantant lies about a great American company and give them a chance to earn your hard earned money.Seek out a Sears hometown store if you are discouraged by the corporate mall stores. These stores are privately owned and are hard working people just like you.
Sorry for the rant...I'm out!
Sep 5, 2012 3:42PM
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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.

 

 

Sep 5, 2012 7:26PM
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    I worked for Sears when we used to sell new homes, my job was setting up and making the arrangements for delivery with the railroads. Those were the good times,all was well, and we knew how to do things well back then.  I am quite old, but everything started going to hell when this computer stuff started taking over. By the way, I still live in my Sears home,it will out live the company.
Sep 5, 2012 10:53PM
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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.

Sep 5, 2012 6:09PM
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The whole market has changed in the last 30 years.  The internet has changed even more for business. The retail pie is only so big, so some have to go.  Unfortunately, who knows how long it will be and we will all be shopping at walmart.  Our choices will be gone.  It is sad that the good businesses that are doing well all sell chinese crap.....who wants it?  I dont.  But now we are stuck with the garbage as that is all that is available.
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 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.

Sep 6, 2012 9:34AM
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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.

Sep 5, 2012 9:00PM
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SAD TO SEE, I ALWAYS LIKED BUYING FROM SEARS, SICK OF WALMART, TARGET, AND OTHER STORES AS THESE, JUST SHOWING THE HORRIBLE TIMES WE ARE LIVING IN AND FACING, GIVE ME THE 50'S AND 60'S ERA ANY DAY.
Sep 5, 2012 5:58PM
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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.

Sep 5, 2012 10:36PM
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Sears and Roebuck had more catalogs than I can remember. The toy catalog was my favorite as a kid.
Sep 5, 2012 6:42PM
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Sad.  They were once a powerhouse but it seemed that management went seriously wrong with their decisions, the final nail being the purchase of KMart and turning into Sears Holding.  I held Sears stock from about 1990 and it made lots of money for me, but it was in their spinoffs that the money was made.  Between Allstate, Discover, Orchard Supply as they bit by bit ratcheted down and sold off, they lost all the successful contributors to their revenue and earnings provided by the truly successful pieces.   Left with just Sears and dumpy KMart there was no where to go but down.   In any case, she was the grande dame of retailing and part of American history and that in itself, is something to mourn the loss of.   Seems like more and more, we have that happening here in the US.    
Sep 6, 2012 1:49AM
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The fall of Sears is not just the fault of Sears. It is the American public, our government, and other influences that have changed our values and ways of life. When Sam Walton was alive, all products in his stores were american made. Go to Wal-Mart and try to find something actually made in the US. Sears use to mean quality. Compare what they still offer today against Wal Mart. Quality is not enough for a fickle buying public that would rather buy something new every week, instead of something that will last. And never ever, completely take the advice of BS stock experts such as the one that wrote this article.
 
Sep 5, 2012 4:10PM
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no one ever went out of business due to good management
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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

 

 

Sep 6, 2012 10:20AM
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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.

 

 

Sep 6, 2012 2:26PM
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Wow, you sure can tell the ages of people who are writing about Sears.  I also grew up with Sears and loved the catalogs and of course the "wish book."  When I married a very low ranking Navy sailor, Sears was the only store that would give us credit.  My husband stayed in the Navy, and we always bought Kenmore appliances as they could easily be serviced at most duty stations.  When we lived in Sicily, I don't know what we would have done without Sears.  All of our clothes came from them through their catalogs.  Getting a package was a big  deal, and as soon as you wore a new outfit, everyone knew you had rec'd your Sears package.  When we lived in Maine, we always bought tires and especially the "die hard" batteries from them.  I for one am sorry to see this happen.
Sep 5, 2012 3:25PM
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I apparently did not use my Sears card enough so they jacked my interest rate up to 35%.  Yes, you read that correctly.  I shredded the card and have not set foot in a Sears store since.  Went to Lowes to buy appliances.
Sep 5, 2012 5:34PM
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People will complain about customer service and credit card interest rates but that is not the reason for the decline in Sears.  Sears faced a perfect storm in retail and could not get the big ship turned around fast enough. 1. Mall traffic has declined which is where Sears has lived and thrived for years.  2.  Demographics changed. When it comes to clothes the parent no longer decides where their kids are going to shop.  Specialty retailers such as Limited, A & F, and Old Navy began to dictate fashion trends, while retailers like Macys went after the Baby Boomers.  3.  Best Buy changed the way we shopped electronics.  Customers no longer had to be coached into buying a higher margin products and the volume of discounted or lower margin products took off.  4.  The names are bigger than the store.  Eddie Lambert bought Sears and Kmart for two reasons. The brand names such as Craftmans, Kenmore, and LandsEnd have more potential value than Sears as a whole. Also, it Eddie likes real estate and knows jack about retail.
Sep 6, 2012 12:04PM
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When my father worked for Sears back in the fifties the store had great products.now everything is designed to be replaced in a short time.
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