Wal-Mart Stores, Inc. (WMT), Target Corporation (TGT): Canadian Retailers Go on the Defensive

Although Target Corporation (NYSE:TGT)’s PE of around 17 is several percentage points above its five year average, the push into Canada opens up a new growth phase for the company. It has long been the only major domestic competitor to Wal-Mart Stores, Inc. (NYSE:WMT), using chic stores to compete on service instead of price. Bringing that model into a market where it has no exposure today should provide a notable boost to the top-line and offers years of expansion opportunity.

Target Corporation (NYSE:TGT)’s revenues have been trending higher since 2005, and the company’s profit margin is a full percentage point above Wal-Mart Stores, Inc. (NYSE:WMT)’s. The stock’s 2.4% yield is identical to Wal-Mart’s. Although Target is relatively more expensive than Wal-Mart, its Canadian expansion efforts make it worth a look for growth-oriented investors.

Attacking and Defending

As Target Corporation (NYSE:TGT) joins Wal-Mart Stores, Inc. (NYSE:WMT) in Canada, Loblaw is trying to cement its market position. The Shoppers deal is a good move and should position the company well. It’s worth a look. Wal-Mart is the best choice for global retail exposure, but Target, while expensive, should see notable growth as it starts to move into new markets.

The article Canadian Retailers Go on the Defensive originally appeared on Fool.com.

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