TGT is up more than 50% in a single year. This is quite the accomplishment considering the pandemic posed an ongoing threat to brick-and-mortar retailers across the globe.
Let’s take a look at whether TGT’s rally will continue after the holiday shopping season.
TGT by the Numbers
TGT was trading at $123 in January of last year. The stock is now trading just under $200. However, TGT was trading at $118 in early July, popped to $154 in August, and climbed toward $100 as the year came to a close. Though TGT is only a couple of dollars away from its 52-week high of $199.50, the stock has a fairly reasonable forward P/E ratio of 22.05. TGT pays a 1.40% dividend.
Of the 19 analysts who have studied TGT, 14 recommend buying, five recommend holding and none advise selling. These analysts have established an average price target of $193.78 for TGT, indicating it is fairly priced at its current trading level.
TGT After the Holidays
Now that the holiday shopping season has come to an end, there is a chance some investors will jump ship, take profits off the table and TGT will decline. If this occurs, investors who have been waiting on the sidelines would be wise to scoop up some shares of TGT. The holidays certainly benefit TGT yet the company is certainly capable of thriving even when consumer spending isn’t heightened due to the societal pressure to buy gifts for family and friends.
TGT stores are inviting, decorated to please the eyes, and provide cheap yet chic high-quality products. Perhaps the best part about TGT stores is they provide a one-stop-shopping opportunity where consumers can pick up everything from frozen food to fresh produce, clothing, electronics, books, magazines, and sundries. This means TGT has the potential to excel year-round. If the economy picks up steam as we segue to 2021, TGT is likely to benefit all the more, selling that much more inventory to the masses.
TGT could easily pop once again when its next quarterly figures are made public. The next earnings report will likely reflect a meaningful uptick in sales resulting from the holiday shopping extravaganza. The company’s previous quarterly earnings were highlighted by comparable store sales increasing more than 20%. The company’s adjusted earnings were up more than 100%. Some of this success can be attributed to TGT’s embrace of e-commerce. The company’s digital sales are also up 155% every quarter. However, much of what drives TGT sales is its comparably low pricing combined with an expansive selection.
The Public Loves Target
If you were to poll random people on the street in your city regarding their opinion of TGT, the vast majority would likely indicate they not only shop at the company’s stores but enjoy the shopping experience. TGT’s latest quarterly results reveal customers are taking more trips to TGT stores and spending more during those shopping outings.
On a year-over-year basis, foot traffic to TGT stores is up by nearly 5%. Furthermore, the average purchase at TGT stores is 15% higher compared to the year prior. Add in the fact that half of TGT’s in-store sales spike is attributable to curbside pick-up stemming from digital transactions and there is all the more reason to feel good about the stock. It is clear TGT’s leaders are pivoting with ease amidst the pandemic, proving quite flexible during this challenging period in human history. This flexibility bodes well for TGT’s prospects as the pandemic winds down and also across posterity.
Buy, Sell, or Hold?
Buy. If the case for TGT detailed above is not convincing enough, look no further than the POWR Ratings. TGT has “A” grades in the Buy & Hold Grade, Trade Grade, and Peer Grade components. The POWR Ratings also have TGT ranked third of 40 Grocery/Big Box Retailers. Investors should have no qualms when adding TGT to their portfolio.
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TGT shares were trading at $197.40 per share on Wednesday morning, down $1.70 (-0.85%). Year-to-date, TGT has gained 11.82%, versus a 1.42% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...
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