We’re buying the dip — again — in a retailer not getting credit for addressing weak sales
We’re buying 100 shares of TJX Companies at roughly $138 each . Following Wednesday’s trade, Jim Cramer’s Charitable Trust will own 1,050 shares of TJX, increasing its weighting in the portfolio to 3.6% from about 3.3%. We’re circling back to TJX, taking advantage of further weakness in shares, to double down on Friday’s purchase . Wednesday’s decline can be attributed to a downgrade to hold from buy at Jefferies. The analysts at Jefferies pinned their downgrade on the weakness at Marmaxx, the unit that houses T.J. Maxx and Marshalls, arguing that CEO involvement in addressing the problems may point to things being more than a “typical merchandising miss.” We’re taking the other side of that trade and giving management the benefit of the doubt. We continue to believe the issues that plagued Marmaxx in the last week’s reported quarter are temporary, with fixes already being put in place — and more importantly, improvements already being realized, according to the company. “I would say we’re seeing a trend improvement already in August versus in Q2,” CEO Ernie Herrman said on the earnings call. Herrman also expressed confidence that Marmaxx will get back to its normal 2% to 3% same-store sales cadence by the fourth quarter. This management team is known for strong execution. Therefore, we don’t think it is odd that the CEO would jump into the mix when the most important division fails to execute. Rather, it’s exactly the kind of response we expect from good leadership. It is a reason to buy the weakness, not avoid it. (Jim Cramer’s Charitable Trust is long TJX. See here for a full list of the stocks.) As a subscriber 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 trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
