3 Reasons to Buy Shares of Target

The company’s shares are up thanks to its strong sales and digital growth. 

The market has been particularly volatile in recent months but Target continues to outperform investor expectations. The company’s shares are up more than 60% year to date and last month, it reported another quarter of strong sales growth. Overall, the stock has been one of the best performers in the S&P 500.

Trade war concerns continue to weigh heavily on the retail sector but Target’s fundamentals remain strong. The company continues to make investments in improving its stores, speeding up customer deliveries, and expanding its digital presence. This has allowed it to remain resilient and compete with Walmart and Amazon. 

And Target still has plenty of room to grow. Listed below are three reasons target is a good long-term investment. 

Target has a plan to deal with tariffs

Many retailers are concerned about how tariffs will impact their pricing and sales. Fortunately, Target has a plan for how it will avoid passing on these costs to the consumer.

The company recently sent a letter to its vendors saying that it expects them to absorb any additional tariff costs. Target’s Chief Merchandising Officer Mark Tritton said the company expects its vendors to develop contingency plans so it doesn’t have to pass on any price increases to Target customers.

It’s unclear whether this strategy will work, though Target does have a significant amount of leverage. This should at least buy the company some time before it has to begin charging customers more. 

The company is partnering with Disney

Last month, Disney announced that it is forming a new partnership with Target. New “shop-in-shop” Disney stores will be available in 25 Target locations as of October 4. And the plan is to launch an additional 40 locations by the following year.

These locations will have music, interactive displays, and seating for families to watch clips of Disney movies. This new partnership should be a win for both companies since both brands appeal to families. 

Target’s had strong digital growth

Part of Target’s efforts to rebrand itself has been an increased focus on its digital presence. The company has invested billions of dollars in improving its digital presence and these efforts are paying off. 

One of the biggest things the company did was to begin offering online shopping through its mobile app. Target also offers in-store pickup as well as delivery through Shipt. This improved the company’s gross margin during the second quarter. 

Target’s in-store shopping experience is a huge part of its appeal to customers. But pairing that a strong digital presence is what has truly made the company start to stand out.

Previous

Next