Dealmaker’s Diary: Machine Learning Meets Markdown Prices

Alpesh Patel|May 22, 2025

When you think of artificial intelligence leaders, retail chains probably don’t come to mind.

But what if I told you one of America’s largest retailers is quietly becoming a technology powerhouse?

It isn’t just moving merchandise. It’s moving data. And lots of it.

With over $54 billion in revenue, It’s got more customer data than most tech companies.

Now it’s putting it to work with sophisticated AI systems that optimize everything from inventory to energy usage.

The market hasn’t caught on yet. But my analysis shows this could drive 32% gains in the next year alone.

In today’s Dealmaker’s Diary, I’ll show you exactly why this retail giant deserves a tech company’s valuation – and how you can profit before the market catches up.

Click on the image below to dive in.

Transcript

Welcome to Dealmaker’s Diary stock of the week – TJX Companies (TJX).

You might not recognize the company name, but you’ll certainly know their brands: TJ Maxx, Marshalls, HomeGoods, and Winners.

Let’s dive into why this retail giant caught my attention.

First, let’s look at the scale. We’re talking about a $110 billion market cap company with revenues exceeding $54 billion. Those are extraordinary numbers that demand a closer look.

One aspect I’ve recently started analyzing is how companies leverage AI technology – both for educational purposes and to ensure they’re staying competitive. TJX impresses here with several AI implementations:

• Retail analytics for optimizing product and merchandising decisions
• Inventory forecasting with store-level granularity
• Customer engagement and personalization
• Computer vision for store optimization
• Fraud detection and loss prevention
• Energy management and sustainability initiatives

Now, let’s examine the numbers:

The forward P/E ratio is 29x – you’re paying $29 for every future dollar of profit.

However, my proprietary Value-Growth-Income rating, which considers valuation, profitability, revenue growth, and dividend yields, gives TJX a score above 7, meeting my minimum criteria.

The Cash Return on Capital Invested (CROCI) is an impressive 19.4x, placing it in the top quartile. This Goldman Sachs Wealth Management metric often indicates strong future performance potential.

The Sortino ratio is above 1 – exceptional, as I estimate only about 10% of companies achieve this level of reward versus downside risk.

Volatility is very low, and the alpha (ability to outperform the market) is strong.

Looking at the price trajectory, if the current trend continues, we’re looking at a potential 32% return over the next eleven months.

But here’s a crucial consideration: If the stock were to drop, would you want to sell, hold, or buy more?

This is exactly the kind of company where you’d want to hold or even increase your position if it dips, because the fundamentals are solid and the track record is strong.

This “Plan B” mindset is an important filter for investment decisions.

If you’re only looking for a quick gain and would exit at the first sign of trouble, you’re inherently taking on more risk.

The stock appears slightly overvalued at current levels, suggesting a gradual entry strategy might be prudent. Consider building your position over time rather than investing all at once.

I believe this analysis demonstrates why TJX deserves to be our Stock of the Week.

The combination of strong fundamentals, AI integration, and proven business model makes it a compelling investment opportunity.

Thank you for joining me.