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Target Displays Solid 3-Month Run-Up, Adds More Than 20%

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Target Corporation (TGT - Free Report) has emerged as an investor favorite courtesy of sound fundamentals and growth efforts that reinforce its position in the ultra-competitive retail landscape. We note that shares of this Minneapolis, MN-based company have appreciated 23.7% in the past three months compared with the industry’s growth of 9.3%.

This Zacks Rank #2 (Buy) stock has also comfortably outperformed the Retail-Wholesale sector and the S&P 500 Index that rallied 2.9% and 2.5%, respectively. Further, the stock is currently trading near its 52-week high of $110.94. In all likelihood, Target with a long-term earnings growth rate of 7.1% can attain new highs. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Strategic Endeavors to Drive Momentum

Target has taken steps that have improved prospects in a big way. The company’s initiatives such as the development of omni-channel capacities, diversification and localization of assortments, and emphasis on flexible format stores to generate higher sales productivity bode well.

From quite some time, Target has been investing in groceries in the wake of rising competition from retailers such as Amazon (AMZN - Free Report) , Kroger (KR - Free Report) and Walmart (WMT - Free Report) . The company launched a new food brand, Good & Gather. Prior to this, the company has launched private-label brands namely Everspring, Auden, Colsie and Cloud Island Essentials.

Moreover, it has added same-day delivery options and undertaken steps to augment supply chain. It is deploying resources for technology and process improvements. Further, it is going to launch a new loyalty program — Target Circle — nationwide on Oct 6, 2019. Courtesy of this program, customers can avail more convenient and customized shopping experience in the upcoming holiday season.

Other notable endeavors include Target Restock program that enable customers to restock their shipping box with essential items online and get them delivered at their doorstep by the next business day for a nominal charge. Drive Up, an app-based service, is another initiative to expedite the shopping process. The service enables customers to place orders using the Target app and have them delivered to their cars. The company offers the service across more than 1,250 stores.

Further, in order to improve supply chain and expand delivery capabilities, the company acquired Grand Junction. Earlier, Target had teamed up with popular online grocery delivery service, Instacart, to capture the booming online grocery delivery market. The company made significant headway in the same-day delivery race by acquiring Internet-based grocery delivery service, Shipt, to provide same-day delivery of groceries, essentials, home, electronics, toys and other products. Shipt operates in more than 1,500 outlets in more than 200 markets.

Wrapping Up

Retail is no more restricted to brick-&-mortar and the scenario has changed drastically with the advancement of technology and digital transformation, which have altered consumer shopping patterns. Consumers now seek more convenience, personalization and speed, and retailers are coming up with ground-breaking ideas to build a loyal customer base.

Target is deploying resources to enhance omni-channel capabilities, coming up with new brands, remodeling or refurbishing stores, and expanding same-day delivery options to take on its rivals. Such efforts help result in robust traffic, favorable store comps and surge in comparable digital sales. We note that comparable sales rose 3.4% during the second quarter of fiscal 2019, marking the ninth successive increase. Comparable digital channel sales surged 34% and added 1.8 percentage points to comparable sales.

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