Jason Del VicarioTarget CorpTGTBUY ON WEAKNESSFeb 23, 2024

They report Wednesday and he expects a repeat of their last fine quarter. New management is turning things around.

Trades at only 15x PE and the turnaround is happening faster than expected.

Since 2019, their Roundel ad business delivers to thousands of corporate customer first-party insights. They're pushing this and their stores in this turnaround.

Poor merchandising decisions, problems managing inventory, the in-store experience kept declining and couldn't compete on price. Many problems. Last month, a new CEO started. Shares gradually rose since last December. Now trades at under 12x forward PE and yields 5.5%. Is up 23% this year. Yesterday, they reported slightly light revenues but gross margins expanded a lot, beating EPS. TGT expects net sales to grow 2% and adjusted operating martin by 4.8%. You have to trust management will deliver later in the year to buy it. They will invest $2 billion this year to boost growth in stores especially in sports, beauty, baby, and home. Will use AI. He believes in the new CEO. The PE is too low to ignore.

They report Tuesday. Target lacks the scale and reach of peers Walmart, Amazon and Costco. TGT has to quickly reinvent to stay alive.

We would consider it a HOLD; it is not perfect, and there are issues to be solved, but this is reflected in the very low valuation. It has recently received some broker upgrades and estimates have been ticking up slightly. It did beat earnings last quarter. Some patience will be required here but we think the overall trend should be up. 
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It reports Wednesday. Was a popular chain before, but then struggled with persistent inflation. Even their private label goods have a price gap with Walmart.

Has a new CEO. This sector is so out of favour. 

Is stuck. Their products are too expensive and there's so much competition from Amazon, TJX and Walmart. Maybe the new CEO is better, but doesn't excite the market.

Yeesh. No support. Continued succession of lower highs and lower lows. 

Well managed, high-quality franchise. Struggled a bit relative to competitors like WMT. Valuation multiple is lower than other retailers, but not downright cheap. Headwinds to US consumer from tariffs on goods, which will impact demand. Be cautious near-term.

Will hold it, is down 40% the past year. Not happy. The stock is hard to defend. Traffic is down. But she still sees value in the brand. They need to reduce their product from 62% discretionary to 50%. She likes their restructuring.

They report Wednesday. It has been a victim of poor luck and protests. Pays a 4.5% yield. He fears that TGT reports an okay quarter but withholds guidance.

Has been a problem child for a while and not worth the headache; there are better retailers. TGT faces a weaker consumer.

It caters to higher-income consumers than Walmart. She's long-term and patient.