Never be on the wrong side of the markets again...

Is it Time to Buy Target?

Happy New Year (again)! Given that I’m excited about what 2016 holds, I want to kick off the year by doing a series of blog posts about popular brands and what the data says about their stocks. Right now, I’m planning to continue this series every Wednesday through January and February, but you know what they say about the best laid plans …

Today, I’m kicking off the series with a perennial fan favorite: Target Corp. (TGT).

You may remember that we looked at Target after Black Friday/Cyber Monday, and aside from technical difficulties, the retailer was a standout winner over the holiday weekend. In fact, it had the second-highest sales of any company in the country (Amazon (AMZN) held the number-one spot). So, coming off its late-November success, Target was ready for share prices to end 2015 on a high note—but it never happened.

In the graph below, you can see Target’s price changes over the past three years. We use each Friday’s closing prices for our graph, so the past five data points show the weeks between Black Friday and today. All in all, the price has stayed relatively flat, and TGT continues to be a Sell in the Turner Analytics database.

1.6.16 (TGT)

When looking at the data, year-over-year growth is one of Target’s biggest downfalls. Based on the Turner Analytics scoring system, the company received a zero out of 10 rating for Year-Over-Year Earnings Growth and a one-out-of-10 rating for Year-Over-Year Revenue Growth. These two statistics, combined with poor multi-year growth and a low return on equity, led Target to receive only a 34 out of 100 for its Fundamental Score. The retailer does have an 80 out of 100 Technical score (giving it a 114 Total Score), but the technical strength was not enough to raise its Sell rating.

There are bright spots on the horizon, though. Most notable this week, Target named a new Chief Stores Officer on Monday. After the announcement, the company saw shares rise—and given Monday’s market climate, that’s an impressive statistic. The other positive news for Target is that its competitors aren’t showing remarkable results either. Wal-Mart (WMT), which is often seen as Target’s main competitor, is a Hold with a total score of 77 (32 Fundamental, 45 Technical), and a small win (such as its new Chief Stores Officer) could be enough to give Target an advantage.

Right now, if you’re looking for a big-name retailer to buy in Target’s sector (Consumer Discretionary), I’d skip both TGT and WMT. Instead, consider home improvement stores such as Home Depot (HD), which is a Buy with a Total Score of 149 (59 Fundamental, 90 Technical), or Lowes (LOW), which is a Strong Buy with a Total Score of 151 (69 Fundamental, 82 Technical).

To stay on top of my latest stock rankings, consider subscribing to my Turner Analytics database. If you would like a more managed portfolio of stocks, consider subscribing to Signal Investor. Or if you are looking for shorter-term trades, Perfect 10 Trader may be the right service for you.



Mike Turner
Turner Trends

Log In

Forgot Password