Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Is Target Corporation (TGT) A Good Stock to Buy?

Many discount retailers got off to a slow start at the beginning of this fiscal year, and Target Corporation (NYSE:TGT), whose fiscal Q1 ended in early May, was no exception. According to the company’s 10-Q, revenue was about flat for the quarter versus a year earlier, with an increase in store count being offset by a small decrease in same-store sales. Thanks to higher interest expenses, Target recorded a 29% decline in earnings compared to a year ago and if we ignore the proceeds on sale of its credit card accounts receivable cash flow from operations was lower as well.

Target Corporation (NYSE:TGT) currently trades at 17 times its trailing earnings, a valuation which seems to indicate that the market is expecting the retailer’s prospects to improve going forward. Wall Street analysts predict that this fiscal year’s earnings per share will be about even with last year’s before the company significantly grows its EPS in the fiscal year ending in January 2015; as a result, the forward P/E is 13. That would place Target close to value territory though of course we wouldn’t have too much confidence in business suddenly picking up next year. As might be expected for a discount retailer, Target’s stock price has a fairly low correlation with market indices at a beta of 0.5. The company recently increased its quarterly dividend payments, but the yield remains unremarkable at 2.4%.

Target Corporation (NYSE:TGT)We track quarterly 13F filings from hundreds of hedge funds and other notable investors as part of our work developing investment strategies; we have found, for example, that the most popular small cap stocks among hedge funds generate an average excess return of 18 percentage points per year (learn more about our small cap strategy). The largest Target Corporation (NYSE:TGT) shareholder at the end of March out of the filers we track in our database was John Levin’s Levin Capital Strategies, which reported a position of 1.9 million shares (find Levin’s favorite stocks). Billionaire Ken Griffin’s Citadel Investment Group was a buyer of the stock in the first quarter of 2013 (see Griffin’s stock picks).

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.