Entering text into the input field will update the search result below

Target Leading Rebound In Retail

Matt Erickson profile picture
Matt Erickson


  • Shares of Target stock rose nearly 5% in trading today.
  • The retail sector has lagged the broad market considerably year to date.
  • Select retail stocks may offer value-oriented investors among the most attractive risk-adjusted return prospects.

It’s one day, so let’s not get ahead of ourselves here, but shares of Target (NYSE:TGT) closed trading today up 4.80%, leading the beleaguered retail sector higher. Coming into today, Target was down -28.15% year to date and over -28% over the trailing one-year period. To put this into perspective, Wal-Mart (WMT) was up 8.47% YTD and 3.75% over the past year, and the S&P 500 was up 10.32% and 15.92%, respectively.

The landscape for retail in general has not been pretty, as traditional brick-and-mortar stores have continued to struggle to adapt to the demands of online consumers and increased competition in the space. Share prices of many well-known retailers have struggled in this environment.

Consider the returns of the following prominent retailers over the past six months (ending June 30, 2017):

  • Target: -26.14%
  • Macy’s (M): -33.20%
  • J.C. Penney (JCP): -44.04%
  • SPDR S&P Retail ETF (XRT): -6.98%
  • S&P 500 Index: +9.34%

Performance of Retail Stocks

Today’s move comes on the heels of Target’s announcement this morning providing guidance for a “modest increase” in same-store sales in its current quarter ending July. Previously, the discount giant had forecast a low single-digit decline. This marks the first time in five quarters that Target has forecast sales to increase, and it has inspired more buyers today to come into retail stocks.

Very few Wall Street analysts place much faith in Target at this point. According to Thomson Reuters, out of 23 analysts polled, the median rating is currently a hold, and only three rate it a buy. Then again, since when have analyst ratings been a leading indicator for stock performance? Far more often than not analysts rank stocks after they have moved, for better or worse. For value-oriented investors, retailers like Target may currently offer among the most attractive risk-adjusted return prospects.

Consider the following:

This article was written by

Matt Erickson profile picture
Polaris Greystone Senior Portfolio Manager, Author of Asset Rotation, Lead Portfolio Manager PGFG Focused Equity and PGFG Concentrated Equity Strategies, Tactical Managed ETF Portfolio Manager, Email: merickson@polarisgreystone.com, Website: www.polarisgreystone.com

Analyst’s Disclosure: I am/we are long TGT, M, WMT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

This article is not intended to serve as a recommendation to buy any individual stock. Prospective investors may wish to consider consultation with a qualified financial professional.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.