T.J. Maxx is in prime position to benefit from Trump's trade policies

• T.J. Maxx is set to benefit from Trump's proposed tariffs on imports.
• The tariffs could lead to earlier inventory orders, benefiting T.J. Maxx's stock purchases.
• Its diverse sourcing and strong earnings position it well against economic challenges.

T.J. Maxx could end up benefiting from Trump's suggested tariffs.

The president-elect's proposed levies on imports will likely lead to stores ordering inventory into the US earlier than usual to avoid the extra costs.

This means more opportunities for T.J. Maxx to buy stock as excess inventory kicks around the market. Moreover, by positioning itself as a lower-cost option, it stands to benefit if competitors raise prices to account for tariffs and customers trade down.

Trump has said he would introduce a 60% to 100% tariff on Chinese goods and a levy of at least 10% on goods imported from every other country. While it is unclear how prices may change, the proposals would significantly change the way retailers do business.

"It would be a massive upheaval to most of the cost structures for these companies," Chris Walton, a former Target executive and cofounder of Omni Talk, previously told BI.

Bank of America analyst Lorraine Hutchinson wrote in a note to clients on Thursday that direct imports are a small portion of T.J. Maxx's business and sources inventory from a variety of countries outside of China.

This means that it may benefit from not having to raise prices as high as competitors heavily reliant on Chinese imports.

For consumers forced to trade down or priced out of their usual retail spots, T.J. Maxx might present itself as the perfect option.

TJX, the parent company of T.J. Maxx, Marshall's, and Home Goods, beat Wall Street's estimates in the third quarter, reporting revenue of $14.1 billion, up 6% from the previous year.

"After a long run of success, one of the questions being asked is how long TJX can keep the growth engines churning," Neil Saunders, managing director of GlobalData Retail, wrote in a note to clients.

"TJX can trade well against any economic backdrop as consumers, especially in the US, like snagging a bargain," he added.

Even if household finances improve, the customer base at TJX stores will continue to shop there because they appreciate the value, he said.