The quietly winning stock Cramer says is on verge of a big upward move

TJX Companies is far from the most talked about stock in the market, but its consistent performance in recent years has made it a bulwark in our portfolio. And Jim Cramer doesn't see that changing anytime soon. Quite the opposite. He argues that TJX shares could be poised for additional gains. "I'm looking at Ross Stores, a discount retailer that's doing a good number, not as good as TJX," Jim said on Wednesday's Morning Meeting. “That sounds to me like maybe TJX can start its next climb.” California-based Ross Stores, which operates the Ross Dress for Less and DD Discount chains, posted better-than-expected quarterly results on Tuesday night, sending its shares up 7% in Wednesday's session. Same-store sales rose 9% in the three months ended Jan. 31, well above FactSet estimates of 5.1%. Even better, its forecast for the current quarter called for same-store sales to increase between 7% and 8%, beating the consensus of 3.9%. Ross is significantly smaller than Massachusetts-based TJX, with stores in the United States alone for a total of 2,300 stores. Ross's $6.64 billion in revenue in the January quarter was just over a third of TJX's $17.74 billion in revenue. Nearly three-quarters of TJX's revenue is domestic, with operations in the TJ Maxx, Marshalls, HomeGoods, Homesense and Sierra chains. Its international operations, primarily in Canada, Europe and Australia, also include additional store brands. TJX has more than 5,200 locations worldwide. Despite these differences, the companies' shared trust in the discount retail model is what is most important to us. Results at Ross Stores show that shoppers are flocking to off-price chains because those chains offer the best discounts. In a time when sticker shock is common, who doesn't love a bargain? TJX pulled off its own quarterly knockout last week, another proof point. TJX 1Y mountain TJX's stock performance over the last 12 months. TJX's shares have more than doubled over the past three years, easily outpacing the S&P 500's nearly 70% advance and outpacing the State Street S&P Retail ETF, a basket of retail stocks, which is up about 28.5%. In this regard, TJX outpaced Ross Stores with an 88% increase and Burlington with a 39% increase. If you look at our portfolio winners over the past 12 months, the biggest winners are tied to powerful, all-consuming themes like the AI framework (Corning, GE Vernova, Broadcom, Nvidia). There are also companies that are cleaning up their own business, like Boeing under a new CEO and DuPont with a breakup plan. Goldman Sachs is riding a well-documented wave of merger and acquisition activity. However, TJX also joins this list with a gain of nearly 30% in the past year. At $161 and change on Wednesday, shares were less than a dollar away from their all-time high close set on Feb. 27. Of course, there is a critical debate among investors about the valuation of TJX stock centers. Shares are trading at about 31 times forward earnings estimates, well above 21 of the S&P 500, according to FactSet. Ross has a forward price-to-earnings ratio of 29. Burlington has a 26. Our view is that TJX's consistency and best-of-breed status justify its premium valuation. Analysts at Bernstein agree, noting in a note to clients last week that "tariffs have been fully eased this year alone" and the company has made structural improvements to its profitability. In our opinion, TJX is the best operator in this area, which is why we prefer its stock to that of Ross Stores and rival Burlington Stores. TJX's scale gives it power to negotiate with sellers looking to unload their goods. When we look at its track record, TJX's buyers (more than 1,400 of them) are as talented as anyone in the industry. "Our buyers often get the first call on overstock because the market likes to do business with our buyers," CEO Ernie Herrman said on last week's earnings call. Traditional retailers typically place orders months in advance, and demand can vary depending on when products are scheduled to arrive in stores. This imbalance between supply and demand creates an opportunity for off-price players to buy excess products at discounts later in the cycle. They can then turn around and sell it at a lower price on their racks and shelves. TJX likes to keep the difference between the retail price and the price it sells for elsewhere. “We use other retailers around us for open pricing, and our buyers do it backwards,” Herrman explained in an earnings call last year. The more excess inventory in the system, the better for off-price buyers. Right now, the market is so mature that TJX is having to put on the brakes, according to Herrman. "We have to slow down buyers significantly in every segment we operate in. That tells us something about availability," the CEO said last week. This is also a good sign for the business and its investors. (Jim Cramer's Charitable Trust is long TJX. See here for a full list of stocks.) When you subscribe to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trading alert before buying or selling a stock in his charitable foundation's portfolio. If Jim talked about a stock on CNBC TV, he would wait 72 hours after issuing the trading alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH THE DISCLAIMERS. NO CIVIL OBLIGATIONS OR DUTIES EXIST OR SHALL BE RESULTING FROM YOUR RECEIVING ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULT OR PROFIT CAN BE GUARANTEED.