Throw Some Love Towards TJ Maxx

TJ Maxx's stock has caught a case of the bearish flu of late. The reason? Peak margin theory put in play by the sell-side. While I appreciate that view, I would look at the stock's weakness as an opportunity to get in at a cheaper valuation before a better than guided to holiday quarter. Underlying this call is: •In line initial 4Q12 earnings guidance actually is a positive sign (when stacked up to the aforementioned peak margin theory) if understanding of TJ Maxx's typical pattern of beating and raising throughout the quarter. •The company continues to show improvement on very tough year ago same-store sales and margin comparisons, and that looks set to continue amid stronger results in Europe and Canada year over year. Plus, TJ Maxx is so lean on inventory that it's probable it sells through merchandise at full price for the holiday season (scarcity in addition to new product buys being in on demand merchandise). The predominate risk I see on TJ Maxx is inventory capping same-store sales and margin upside. But, I am banking on the management team's normal strong execution here, chasing the correct product and then watching it fly off the shelves and benefiting merchandise margin.