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Here's Why Target (TGT) Could Be a Promising Pick for 2024
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Target Corporation (TGT - Free Report) has demonstrated remarkable strength in the stock market, exhibiting commendable performance over the past three months. Based in Minneapolis, MN, the company has witnessed a robust 28% increase, outpacing the industry’s rise of 18.6%. This success is attributed to a combination of factors, including a diverse product range, strategic market expansions and the seamless integration of digital technologies.
A well-recognized player in the discount industry, Target, a Zacks Rank #2 (Buy) company, has been making tactical changes to its business operations to adapt and stay relevant in the competitive retail landscape. The company has been making concerted efforts to enhance shopping methods and techniques, be it in-store or online.
Key Drivers to Watch
Despite industry challenges, Target is poised to capture market share over time, driven by its compelling value proposition and a spectrum of initiatives. These encompass the expansion of new stores, innovations in owned brands, partnerships with popular brands and the enhancement of same-day services to drive traffic.
Target has strategically charted a comprehensive course to fortify its market presence and elevate sales performance. This includes a substantial investment of approximately $4-$5 billion in fiscal 2023, allocated toward scaling operations, attracting new customers, and optimizing services and supply-chain facilities. Concurrently, the company is implementing cost-containment efforts, anticipated to yield benefits in the near term.
We expect Target to register margin expansion ahead, thanks to cleaner inventory levels resulting in a reduction in markdown frequency and magnitude. Additionally, lower supply chain and freight costs are likely to further contribute to margin improvement.
Recognizing the digital prowess, Target has positioned itself at the forefront of innovation. The company's investment in expanding digital and omni-channel capabilities, alongside features like 'Shopping Partner' and enhanced delivery options with Shipt, reflects a commitment to seamless integration of online and offline retail.
Consumers continue to choose Target for its diverse assortment of owned and national brands, competitive pricing and accessibility. Strong partnerships with industry giants like Apple, Disney, Ulta Beauty and Levi's underscore Target's commitment to providing a compelling and diverse shopping experience.
Image Source: Zacks Investment Research
An Attractive Opportunity
Shares of Target have regained a lot of lost ground, thanks to its better-than-expected third-quarter fiscal 2023 results. Despite a decline in revenues due to soft demand in discretionary categories, disciplined cost and inventory management contributed to a meaningful improvement in earnings. The company remains fundamentally sound and financially stable, demonstrating the capacity to sustain dividend payments.
Despite the recent stock price increase, Target, with a Value Score of A, appears undervalued compared to the industry. Target’s P/E ratio of 16.64 is notably lower than that of the industry’s 23.2. This presents a compelling entry point for investors seeking value and growth potential in the long term.
Looking ahead to fiscal 2024, the Zacks Consensus Estimate for earnings per share has risen 0.3% in the past seven days. Moreover, it suggests a 9.3% improvement from the year-ago period. With a quarterly dividend of $1.10 ($4.40 annualized) per share, Target's current yield stands at 3.1% at the current stock price. TGT's payout ratio is 56, accompanied by a commendable five-year dividend growth rate of 14.9%.
Target's strategic positioning and positive outlook make it a compelling investment option for 2024.
3 More Stocks Looking Red Hot
Here, we have highlighted three other top-ranked stocks, namely Casey's General Stores (CASY - Free Report) , Sysco Corporation (SYY - Free Report) and Ollie's Bargain (OLLI - Free Report) .
Casey's, the third-largest convenience retailer and the fifth-largest pizza chain, currently sports a Zacks Rank #1 (Strong Buy). Casey's has a trailing four-quarter earnings surprise of 17.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Casey's current financial-year earnings suggests growth of 9% from the year-ago reported numbers.
Sysco Corporation, a food and related products company, currently carries a Zacks Rank #2. SYY delivered a back-to-back positive earnings surprise in the past two quarters.
The Zacks Consensus Estimate for Sysco’s current fiscal-year sales and earnings suggests growth of 4.1% and nearly 8%, respectively, from the year-ago reported numbers.
Ollie's Bargain, America’s largest retailer of closeout merchandise and excess inventory, currently carries a Zacks Rank #2. Ollie's Bargain has a trailing four-quarter earnings surprise of 7%, on average.
The Zacks Consensus Estimate for Ollie's Bargain’s current financial-year sales and earnings suggests growth of 14.9% and 74.7%, respectively, from the year-ago reported numbers.
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Here's Why Target (TGT) Could Be a Promising Pick for 2024
Target Corporation (TGT - Free Report) has demonstrated remarkable strength in the stock market, exhibiting commendable performance over the past three months. Based in Minneapolis, MN, the company has witnessed a robust 28% increase, outpacing the industry’s rise of 18.6%. This success is attributed to a combination of factors, including a diverse product range, strategic market expansions and the seamless integration of digital technologies.
A well-recognized player in the discount industry, Target, a Zacks Rank #2 (Buy) company, has been making tactical changes to its business operations to adapt and stay relevant in the competitive retail landscape. The company has been making concerted efforts to enhance shopping methods and techniques, be it in-store or online.
Key Drivers to Watch
Despite industry challenges, Target is poised to capture market share over time, driven by its compelling value proposition and a spectrum of initiatives. These encompass the expansion of new stores, innovations in owned brands, partnerships with popular brands and the enhancement of same-day services to drive traffic.
Target has strategically charted a comprehensive course to fortify its market presence and elevate sales performance. This includes a substantial investment of approximately $4-$5 billion in fiscal 2023, allocated toward scaling operations, attracting new customers, and optimizing services and supply-chain facilities. Concurrently, the company is implementing cost-containment efforts, anticipated to yield benefits in the near term.
We expect Target to register margin expansion ahead, thanks to cleaner inventory levels resulting in a reduction in markdown frequency and magnitude. Additionally, lower supply chain and freight costs are likely to further contribute to margin improvement.
Recognizing the digital prowess, Target has positioned itself at the forefront of innovation. The company's investment in expanding digital and omni-channel capabilities, alongside features like 'Shopping Partner' and enhanced delivery options with Shipt, reflects a commitment to seamless integration of online and offline retail.
Consumers continue to choose Target for its diverse assortment of owned and national brands, competitive pricing and accessibility. Strong partnerships with industry giants like Apple, Disney, Ulta Beauty and Levi's underscore Target's commitment to providing a compelling and diverse shopping experience.
Image Source: Zacks Investment Research
An Attractive Opportunity
Shares of Target have regained a lot of lost ground, thanks to its better-than-expected third-quarter fiscal 2023 results. Despite a decline in revenues due to soft demand in discretionary categories, disciplined cost and inventory management contributed to a meaningful improvement in earnings. The company remains fundamentally sound and financially stable, demonstrating the capacity to sustain dividend payments.
Despite the recent stock price increase, Target, with a Value Score of A, appears undervalued compared to the industry. Target’s P/E ratio of 16.64 is notably lower than that of the industry’s 23.2. This presents a compelling entry point for investors seeking value and growth potential in the long term.
Looking ahead to fiscal 2024, the Zacks Consensus Estimate for earnings per share has risen 0.3% in the past seven days. Moreover, it suggests a 9.3% improvement from the year-ago period. With a quarterly dividend of $1.10 ($4.40 annualized) per share, Target's current yield stands at 3.1% at the current stock price. TGT's payout ratio is 56, accompanied by a commendable five-year dividend growth rate of 14.9%.
Target's strategic positioning and positive outlook make it a compelling investment option for 2024.
3 More Stocks Looking Red Hot
Here, we have highlighted three other top-ranked stocks, namely Casey's General Stores (CASY - Free Report) , Sysco Corporation (SYY - Free Report) and Ollie's Bargain (OLLI - Free Report) .
Casey's, the third-largest convenience retailer and the fifth-largest pizza chain, currently sports a Zacks Rank #1 (Strong Buy). Casey's has a trailing four-quarter earnings surprise of 17.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Casey's current financial-year earnings suggests growth of 9% from the year-ago reported numbers.
Sysco Corporation, a food and related products company, currently carries a Zacks Rank #2. SYY delivered a back-to-back positive earnings surprise in the past two quarters.
The Zacks Consensus Estimate for Sysco’s current fiscal-year sales and earnings suggests growth of 4.1% and nearly 8%, respectively, from the year-ago reported numbers.
Ollie's Bargain, America’s largest retailer of closeout merchandise and excess inventory, currently carries a Zacks Rank #2. Ollie's Bargain has a trailing four-quarter earnings surprise of 7%, on average.
The Zacks Consensus Estimate for Ollie's Bargain’s current financial-year sales and earnings suggests growth of 14.9% and 74.7%, respectively, from the year-ago reported numbers.