Last Updated: January 11, 2023
With a nearly 20% increase in stock value and ROE of almost 50% for the past year, Target Corporation is an attractive investment. But is it the right time and how to buy Target stock?
Read on to learn more about the company, its stock performance, and the steps to follow if you decide to buy shares in this retail giant.
About The Company
Welcoming two million customers every day, Target is currently the eighth biggest retail chain in the US. The more than 1,900 stores and 46 distribution centers employed 368,000 people and generated more than $93 billion in revenue in 2020. The retailer sells a wide range of products, from household essentials, through groceries and beverages, to home décor, apparel, and accessories. Despite having an excellent brick-and-mortar strategy, Target does attend to the needs of online shoppers as well.
But how did Target get started?
The retail giant has gone a long way since its humble beginnings to become what it is today. In 1902, banker and real estate investor George Draper Dayton opened the first Goodfellow Dry Goods store in Minneapolis. After a year, the name was changed to Dayton Dry Goods Company and shortened to Dayton Company in 1911. Half a century later, the company became known as the Dayton Corporation.
The first Target shop, designed as a discount version of Dayton’s department stores, was opened in 1962 in Minnesota. By 1974 Target had become the chain’s leading revenue producer. To reflect this change, the company rebranded again to become Target Corporation.
Even though the nationwide expansion of Target started in the 1980s, the company started selling its stock to the general public long before that. The initial public offering (IPO) took place in October 1967. At the time, Target’s stock (TGT ticker) was selling at $34 per share. So far, the company has performed six stock splits. Out of those, five were 2 for 1, and one was 3 for 1.
Now, let’s try to help you decide if you should invest in Target.
Should You Buy Target Stock?
The stock market is inherently volatile, and the stock value of every public company fluctuates more or less. If you want to invest in a stable company, make sure you check some past trends in the company.
Things that could help you make a decision, besides knowing how to buy Target stock, are:
- the company’s earnings growth
Are earnings increasing over a longer period? Or are they perhaps plateauing?
- the D/E (debt to equity) ratio
Is this ratio in line with industry norms? Or is it higher/lower?
- the P/E (price to earnings) ratio
How does the stock price reflect the company’s earnings?
Does the company pay dividends to its shareholders? How often?
So, how is Target doing financially?
Target has a market cap of $102.58 billion. This puts the company in 137th place in the world’s most valuable companies by market cap.
Target has been showing a steady increase in sales and, as a result, in annual revenue year after year. The company finished 2020 with a revenue of $93.561 billion, which was almost 20% up from the 2019 figure of $78.112 billion. While Target’s full-year results for 2021 are yet to be released, the company expects another double-digit growth.
Target probably has the COVID-19 pandemic to thank for this since it drove shoppers to stock up on essentials in discount stores. The recent sales increase has also significantly boosted the Target stock value.
How Is Target stock doing?
The company’s shares received a lot of attention from a substantial price movement over the last few months, increasing to $266 at one point in July 2021 and retreating to around $220 in January 2021.
Target’s stock has gone as high as $268.98 and as low as 166.83 in the past 52 weeks. At the beginning of 2022, the TGT share price is around $215. The price has been falling for the past 10 days when writing this article, so the end of January 2022 is marked by a 5.6% decrease in price.
Why did Target stock drop?
The reasons for a stock price drop are typically complex. But when speaking of Target’s recent hiccups, we can’t ignore the company’s attempts to keep product prices down during inflation for its customers and try to soak up the high costs by itself. Yet, with the revenue increase, the adjusted price per share in the last Target quarterly report was still higher than expected.
So, is Target stock buy or sell?
To further analyze the health of Target’s balance sheet, we should look into Target’s D/E ratio. The higher the D/E ratio, the more company funds growth by debt, which is not something investors are looking forward to.
Target’s D/E ratio has been reducing for the past five years, standing at 0.96 at the end of January 2022. Moreover, Target’s P/E ratio of 15.3 is at a good level, compared to its industry’s average of 15.8.
Investigating Target stock information further shows that the company’s stock is also a dividend stock. The annual dividend they paid per share in 2021 was $3.60. The company has had regular dividend payouts every quarter since 1967 and has been increasing base dividends ever since 1972. That makes it one of the 65 Dividend Aristocrats in the S&P 500 index.
Is Target stock a good investment then?
Having stock in Target may be an interesting opportunity for any investor looking to diversify their portfolio with some retail dividend stock. Or for anyone who simply wants to invest in a stable growth company and buy some blue-chip stock.
How to Buy Target Stock
One can buy Target stock in two ways: directly from the company or through an online broker/trading platform. Both beginners and seasoned investors can also use the services of a financial advisor to build or improve their investment strategy.
Directly from Target
Buying stock directly from Target is possible for all who want to enroll in the company’s Direct Investment Plan. Target’s stock exchange is done through Shareowneronline, the platform that serves as a transfer agent and a register for the TGT stock. All necessary information about the plan, together with brochures and forms, are available on the site.
Online Brokers/Trading Platforms
Before deciding to buy TGT shares through an online brokerage firm or trading platform, you should do some thorough research. Compare different platforms and see which one is appropriate for you. Naturally, not all platforms have access to all stock exchanges. What you should be looking for are ones that have access to the New York Stock Exchange, as Target is an NYSE stock.
Some platforms charge high commission rates, while others might justify the high fees by including more features. Do your homework well before committing. Reviews are a great starting point to narrow down your options.
But no matter which platform you decide to use, the process is pretty simple. It involves the usual steps like setting up an account, making a deposit, and finally buying the shares.
Financial advisors offer various ranges of services and charge different fees. Nevertheless, most of them can help you assess your current financial situation and how TGT shares fit into it.
The stock market can go down as fast as it goes up. Having a professional provide you with valuable advice can be highly beneficial. Especially now, in the post-COVID market, after the (short-lived) stock market downturn from March 2020.
Every investment holds a certain degree of risk, so inherently, there will always be pros and cons of investing in the stock market. Therefore, carrying out a good analysis of Target stock performance (screening it through several parameters) is very well worth it. As mentioned, price per share has shown a downward trend recently, but this alone should not be the only green light to a buy.
Target is one of the top 10 US retailers. The company has been increasing sales and earnings year after year. The earnings growth per share is at 40.43% for the past year, while the annual growth in sales is 13.64%.
Target’s stock is a dividend stock. The company has been paying annual dividends every quarter since 1967.
The stock symbol for Target is TGT:NYSE. It denotes that this stock is being exchanged on the New York Stock Exchange.
Target went public on October 18, 1967.
Every transaction on the stock market carries certain risks, and investors have different parameters when deciding if a stock is a buy or not. Please refer to the article above to learn more about the Target Corporation and how to buy Target stock.