Retail check: Burlington Stores and Ross Stores picked by Goldman Sachs as outperformers in tough macro backdrop
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Goldman Sachs thinks the off-price sector is defensively positioned within retail and could benefit in a rising inflation environment. 
"The outlook for the apparel sector continues to weaken, with rising industry inventory levels, pressures to consumer discretionary income, inflationary headwinds, and ongoing cost pressures that weigh on margins and returns," updated analyst Brooke Roach.
Roach and team single out Burlington Stores (NYSE:BURL) and Ross Stores (NASDAQ:ROST) and assign both retailers a Buy rating.
They acknowledge that BURL has near-term execution risk due to its larger store size format, higher inventory levels, and recent sector underperformance, but believe valuation already captures those negatives and sequential improvement ahead could result in greater market share capture. BURL is assigned a price target of $183 (22% upside).
ROST's exposure to the low-income consumer will likely weigh on near-term results, but Goldman Sachs forecasts year-over-year comparable sales gaps will narrow going forward on the back of stronger inventory availability and execution. The stock is tagged with a price target of $102 (24% upside).
The view on TJX Companies (TJX) from Goldman Sachs is more cautious with the stock initiated at a Neutral rating.
Compare valuation, growth and profitability metrics on BURL, ROST, and TJX side by side.