“Since 1/1/1990, the stock of Target has generated a 5770% return versus the S&P 500 return of 1950% as of 12/28/21. Being the go-to everyday mass merchandise brand has its benefits.”
COMPANY PROFILE
Target Corporation operates as a general merchandise retailer in the United States. The company offers food assortments, including perishables, dry grocery, dairy, and frozen items; apparel, accessories, home decor products, electronics, toys, seasonal offerings, food, and other merchandise; and beauty and household essentials. It also provides in-store amenities, such as Target Cafe, Target Optical, Starbucks, Ulta, Apple, and other service offerings. The company sells its products through its stores; and digital channels, including Target.com. As of January 30, 2021, the company operated approximately 1,897 stores. Target Corporation was founded in 1902 and is headquartered in Minneapolis, Minnesota.
Style Factor Benefits
From a factor scoring perspective versus the other 199 brands in the brands index, here’s where Target scores well as of 12/28/21:
82% for high, attractive dividend yield
76% high shareholder yield
83% top FCF growth
91% lowest price/sales
82% high FCF yield
92% high 5 year ROIC growth versus weighted cost of capital
83% top Mega Brands, a proprietary stable predictable brands screen
89% high absolute sales
86% highest % change in estimated sales, last 4 weeks
12/28/21 Update:
Target has been a major beneficiary of the Covid19 pandemic. As a key retailer serving consumers in a closed and restricted economy, they took in tens of millions of new consumers and allowed them to consolidate shopping needs into fewer and fewer retailers. That behavior should largely stick to the benefit of Target and a few other brands. Target has become a key retailer for job hunters as well as the brand continues to pay better than peers and offer strong reasons to stay loyal. Yes, that has and will continue to hurt margins but the loyalty to Target because they were one of the retailers that didn’t raise prices significantly and fleece their consumers will pay dividends for a very long time. So long as Target continues to give customers more reasons to shop with similar and more frequency, the stock will continue to thrive. Over the last few months, the stock fell out of its long term bull channel once the margin hits were reported in the last earnings but to me, TGT is a stable, predictable consumer staple and i’ll continue to hold the stock and trade around it when it gets beat up.