Target (NYSE:) stock has been on quite a run in 2019. The company is a bright spot at a time when we hear about the “Amazon effect.”
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Don’t get me wrong, Amazon (NASDAQ:) is still a clear and present danger to traditional retailers. However, Target is showing other retailers that there is a path to compete with Amazon. And it appears that there are many customers looking for an alternative.
There’s Bullish Momentum on TGT Stock
Since the beginning of the year, Target stock is up over 50%. In the last quarter, TGT shares are up 24.4% as compared to a 5.2% gain in the S&P 500. Narrowing the time frame makes the story even stronger. TGT stock is up 3.4% since Labor Day, and over 31% for the last 30 days. Target stock is also seeing volume that exceeds its 20-day average.
Why is the stock so attractive? One answer is revenue. Revenue for the first and second quarters has equaled or exceeded their revenue for fourth quarter 2018. And the third quarter is projecting to tell a similar story.
Typically, retailers post their best revenue as they get a boost from the holiday shopping season. This year, Target seems to be carrying momentum from last year’s fourth quarter, which was actually a volatile quarter for TGT stock (as well as the entire market). If revenue is strong now, then revenue and the company’s stock price should continue to rise.
Target Has One Thing Amazon Does Not
And Target has one thing that Amazon doesn’t — and by some accounts, to — offer: a nice dividend. In addition to enjoying capital growth that is beating the broader market, TGT shareholders can get a nice payout. Target also has a 47-year history of increasing their dividend which is currently paying 66 cents per share.
Here’s Why I Love Target Stock in the Fourth Quarter
Target has just announced the beginning of a loyalty program, named Target Circle. The program, which starts October 6, will give qualified customers the opportunity to earn 1% cash back on their entire purchase. They can redeem this money on future purchases. There is no membership fee. Where I believe Target really gets the win is the ability for customers to direct Target’s charitable giving to local non-profit organizations.
The loyalty club announcement comes on the heels of the announcement that 25 select Target stores will partner with Disney (NYSE:). The partnership will feature Disney Stores as a “shop-in-shop” addition. Disney is looking to break away from the mall model and has found a willing partner in Target.
After the initial roll-out on October 4, 2019, the plan is for 40 additional Target stores to add the Disney experience by October 2020. The stores will carry over 450 items that include toys, games, apparel and accessories.
Many of the items at the Disney Store at Target will be items that were previously available exclusively at Disney retail sites. The partnership will also give Target customers access to a new digital experience at Target.com/Disneystore that launches on October 4, the same date as the store openings.
If all that isn’t enough to get you excited, consider that Target is continuing to ramp up their “owned brand” lineup with the , Target’s initial foray into the organic food market.
“Our guests are incredibly busy and want great-tasting food they can feel good about feeding their families,” says Stephanie Lundquist, executive vice president of Target’s food and beverage division. “Good & Gather is our way of helping even the most time-strapped families discover the everyday joy of food.”
If they can accomplish that goal and steal customers away from Amazon (which has a partnership with Whole Foods), all the better.
There May Never be a Better Time to Own TGT Stock
That may sound like hyperbole. But Target is doing a lot of really smart things. And the fact is, most of them are working out.
What I love about Target is that they are keeping the pedal to the metal. Will the Disney venture work out? Will Good & Gather help keep revenue soaring? These are unanswered questions, but they show that Target is not standing pat. Considering their competition, they can’t afford to.
As of this writing, Chris Markoch did not hold a position in any of the aforementioned securities.
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