Target TGT Stock Analysis: Hovering near a five year low, can Target TGT stock bounce back with strong holiday shopping season?
Before we begin, I guess I should set the scene. I know Kiana has attracted an international audience – and because of that, I think it’s important for our investors from across the world to take note that we Americans are about to embark on the peak retail season which traditionally begins with “Black Friday” – the Friday after Thanksgiving. It is during this time that retailers such as Target, Wal-Mart, Amazon, Macy’s, etc. offer astounding deals to bring in shoppers’ thirst for the latest toys, gadgets, and fashion.
Thus – in the next few weeks, I will present several retailers to see if there’s an opportunity for us investors to find entry points and take advantage of strong consumer confidence that may lead to strong sales for these businesses and hopefully profit in our portfolios.
For those of you that don’t know, Target is a large brick and mortar retailer. In the U.S., Target is often contrasted against Wal-Mart. They both have online presences. They both offer a wide variety of items including domestics, clothing, toys, electronics, and groceries. However, whereas Wal-mart has smaller isles and lower prices, Target consumers often pay a premium for slightly higher-end goods and very spacious layouts. Consumers also joke about the uncanny occurrence of spending a TON of money they never planned on spending while at Target.
Good to Know: Target TGT Stock currently pays $0.62 in dividends, which is roughly 4.2% annually. The next dividend date will be in mid-February.
The company that would eventually become the Target TGT Stock (NYSE: TGT) was actually founded in 1902 when George Draper Dayton opened a dry goods store in Minneapolis, MN. In 1962, Target (a discount chain) was launched. The company grew and became known as the Dayton Company and in 1967 offered it’s first public common stock. The company has grown, merged, acquired, and changed its name and expanded into Canada. While we are all for companies growing, expanding, and ultimately succeeding, we still need to use IDDA for Target TGT Stock to see when there is a good time to buy. So let’s take a look at the fundamentals!
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1- Fundamental Points: Target TGT Stock Analysis
Who are they?
“We fulfill the needs and fuel the potential of our guests. That means making Target your preferred shopping destination in all channels by delivering outstanding value, continuous innovation and exceptional experiences—consistently fulfilling our Expect More. Pay Less.® brand promise.”
As mentioned above and demonstrated in the purpose statement, Target wants to be your preferred shopping destination in all channels be it brick and mortar or online.
The company that would become Target TGT Stock was founded in 1902 by George Dayton and his store became known for quality products at good prices, principled business practices and a “spirit of giving.”
The first Target store was opened in Roseville, MN in 1962. Target stores quickly become the highest earning division under the Dayton company’s umbrella. The company grew and established a niche with affordable, yet stylish and desirable products. With its success, the Dayton company changed its name in 2000 to the Target Corporation to reflect its core business.
Brian Cornell is at the helm of Target and has been since 2014. He oversees over 1,800 stores, 320,000 employees and millions of “guests.” Mr. Cornell’s executive team is a mix of new faces and veterans bringing a balance of innovation and historical knowledge to their decision making process.
Good to Know: Target TGT Stock has beat earnings estimates three quarters in a row. Q4 earnings will most likely be reported in January 2018.
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Despite Target TGT stock’s ability to beat earnings estimates, the stock is down nearly 22% YTD. We’ll get into the why, but here’s the high-level summary. We have a company in the midst of a turn-around. A company trying to redefine itself (or make itself standout) against its competitors. A company that beats earnings forecasts, but cannot make bold predictions for the future.
We have a long-standing company with a seemingly competent leadership team that pays dividends and has maintained revenue generation. Who do analysts fear might beat them? Let’s take a look at the competition.
Target TGT Stock – The Competition
Per Morningstar, Target TGT Stock is competing against these companies:
- Dollar General
Sometimes the Morningstar analysis is a little goofy, but they at least got the top 3 right. But all analysts worry about the shadow cast by that behemoth in Seattle – Amazon. So for our sake, and because Target plays in the online marketplace, Amazon is a definite domestic competitor.
What are they doing right?
So Target TGT Stock has some stiff competition right? And the news has been fairly grim. But what are the doing right?
Well first – despite all that competition, their sales and revenue remain steady. To me, that indicates that they are not losing market share – and that’s a good battle to win in today’s world. Additionally, while they took a hit on their earning per share in Q3 ’17, it definitely within their 5 year range. Again, it’s not a win – but their EPS isn’t a loser either. Now Target TGT stock appears a little late to the party when it comes to digital sales, but they have made it a focus as part of their turn around and their digital sales have increased in excess of 20% each quarter. So again – they’re not the best – but they have a road map. So let’s take a look at the technicals to add to our evaluation.
2- Technical Points: Target TGT Stock analysis
If this is your first time here, technicals are the second point of IDDA. Target is barely above its 52 week low of 50.02. (Closed today at 57.49). Investors just haven’t been satisfied with Target TGT Stock beating its conservative earnings predictions. But beyond gut feelings, let’s take a look at some charts.
The first half of the year was tough on Target TGT stock. Lots of variabilities and a steep decline. However, since July, it appears that Target TGT Stock is slightly less volatile and is showing signs (albeit small) of a recovery. Let’s do a bit more digging.
Of note, there are two Fibonacci regressions on the Target TGT Stock analysis above. But let’s look at Ichimoku first. For the first half of the year, Target TGT stock traded below Ichimoku cloud. Additionally, Target TGT stock would hover around support levels such as 50% (64.51 in March) until a disappointing earnings call. However, in July, a slight uptrend begins and Target breaks through the Ichimoku cloud. This initial analysis shows some pretty tight support and resistance levels, but it appears that at 57.49, both the Ichimoku cloud and the 50% Fibonacci retracement may be providing support.
Let’s change the chart to a 4-hour look.
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The short-term resistance levels are set at the next Fibonacci levels, at 57.49 and 59.36 respectively. Now onto our third point – Market Sentiment.
3- Market Sentiment: Target TGT Stock
Yep – the MacD, RSI, and CCI. If you don’t know about these, you should really sign up for Kiana’s educational materials!
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As mentioned before, the street simply doesn’t care much for Target TGT Stock’s conservative earnings estimates. Remember, Wall Street wants companies to deliver bold predictions and then subsequently exceed those predictions. Does that make Target TGT stock a bad company? No, not necessarily. I will say this though – the MacD, CCI, and RSI are not looking too good. See that blue line on the MacD Chart, we want it curving upwards and ready to cross the orange line. The CCI and RSI are a bit inconclusive at this point. I’d watch these some more if I were you.
Check Point Software CHKP Stock Analysis – Investing Strategy
Target TGT stock is a known entity that’s maintaining its revenue and sales in a fiercely competitive environment. It pays dividends, which is nice – but those who may have been holding onto the stock long term have paid a price for its lack of innovation. Its leadership team says it’s trying to turn the ship around.
I’ve painted a bit of a mixed picture here. I love shopping at Target, but the stock just doesn’t wow me. But, you’re not me! Hopefully, you’re smarter than me and you also are going to calculate your risk tolerance before deciding on the investment strategy that is suitable for your portfolio. If you’re unsure about what I’m talking about, sign up for a free master class to learn more!
To supplement your risk management strategy, I’d like to note that CHKP Stock’s Beta is 0.41 – meaning its correlation to overall market movements is weaker than a lot of the other stocks we’ve taken a look at. Remember, something like Gold (GLD) has a beta of 0.09 – which makes it a hedge against a bear market. Target TGT stock is not quite that strong, however.
As always, we provide Invest Diva’s calculations for important approximate levels, with regards to the Check Point Software CHKP stock analysis.
|Support Levels||Turning Point||Resistance Levels|
There you go – is there an opportunity in Target TGT Stock? Perhaps. Remember – if you use the right strategy, you may turn a profit. Additionally, don’t forget about those dividends. They come in handy!
By the way, I’m having a ton of fun in our Investing Group. Kiana is dropping knowledge bombs all over the place, and our fellow investors are prescreening AMAZING stocks to look at.
Happy Hunting and Happy Thanksgiving!!!