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Add Target (TGT) as You Reshuffle Your Portfolio for 2022

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The market is trying to cope with headwinds related to inflation, supply chain issues and escalating tensions between Russia and Ukraine. So, you need to be smart when it comes to investment. The right choice of stock may fetch you higher returns even amid changing market dynamics. We present you with one such stock, Target Corporation (TGT - Free Report) , that looks well-poised, given its sound fundamentals and growth efforts.

One of the renowned names in the Retail – Discount Stores industry, Target has been making tactical changes in its business operations to adapt and stay relevant in the ever-evolving retail landscape. The company has been undertaking several strategic initiatives — be it new stores or digital capabilities, owned brand innovations, national brand partnerships or expansion of same-day services and rollout of sortation centers — to drive engagement, traffic and market share gains.

Target envisions low-to-mid-single digit revenue growth, an operating margin rate of 8% or higher, and a high-single-digit increase in adjusted earnings per share for fiscal 2022.

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Target has been making constant efforts to improvise shopping methods and techniques, be it in-store or online. It has been making investments to scale up fulfillment services and enhance supply chain capabilities. The company’s delivery services like doorstep delivery, curbside pickup or buy online and pick up at store, has been playing a crucial role in serving consumers better. Management has unveiled plans to invest up to $5 billion to keep scaling its operations through 2022.

This Minneapolis, MN-based company continues to lay emphasis on developing flexible format stores to penetrate deeper into urban and suburban areas. This approach helps the company to augment sales without substantial capital investment. These types of stores generally have higher sales productivity. Target envisions opening nearly 30 stores and remodeling about 200 stores in fiscal 2022.

 

Zacks Investment Research
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Thanks to its one-stop shopping destination, consumers have been opting Target for its multi-category assortment of owned and exclusive brands as well as popular national brands. Impressively, the company has been striving to build on its partnerships, especially with popular and high-profile brands like Apple, Ulta Beauty and Levi's. The company unveiled plans to add over 250 new Ulta Beauty shop-in-shops at Target by the end of this year, after opening 100 locations in fiscal 2021. Target expects to open at least 800 such ULTA locations in the coming years.

Wrapping Up

Well, the strategy to sell quality products at reasonable prices has aided Target to emerge as a favorite destination for shoppers, be it essentials or discretionary purchases. The business model has helped gain consumers’ wallet share and drove top-line growth. Target’s well-chalked assortments, refurbished stores and growing digital capacity are likely to keep it in good stead in the days ahead. Shares of this Zacks Rank #2 (Buy) company have rallied 20.7% in the past year compared with the industry’s growth of 22.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

3 More Stocks Looking Red Hot

Here we highlight three better-ranked stocks, namely, Tapestry (TPR - Free Report) , Tractor Supply Company (TSCO - Free Report) and Sprouts Farmers Market (SFM - Free Report) .

Tapestry, which provides luxury accessories and branded lifestyle products, carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 28.2%, on average.

The Zacks Consensus Estimate for Tapestry’s current financial year sales and EPS suggests growth of 17.5% and 22.9%, respectively, from the year-ago period. TPR has an expected EPS growth rate of 12.5% for three-five years.

Tractor Supply Company, a rural lifestyle retailer in the United States, carries a Zacks Rank #2 at present. TSCO has an expected EPS growth rate of 9.8% for three-five years.

The Zacks Consensus Estimate for Tractor Supply Company’s current financial-year sales and EPS suggests growth of 8.2% and 9.2%, respectively, from the corresponding year-ago period’s actuals. TSCO has a trailing four-quarter earnings surprise of 22%, on average.

Sprouts Farmers offering fresh, natural and organic food products currently carries a Zacks Rank of 2. SFM has an expected EPS growth rate of 7.3% for three-five years.

The Zacks Consensus Estimate for Sprouts Farmers’ current financial-year sales and EPS suggests growth of 4.7% and 4.8%, respectively, from the corresponding year-ago period’s readings. SFM has a trailing four-quarter earnings surprise of 17.9%, on average.

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