We recently published a list of 7 Consumer Goods and Retail Stocks on Jim Cramer’s Radar. In this article, we are going to take a look at where Target Corporation (NYSE:TGT) stands against consumer goods and retail stocks on Jim Cramer’s radar.

Jim Cramer, host of Mad Money, recently took a close look at market trends and explained why many stocks are continuing to struggle, specifically in sectors like consumer goods. Cramer pointed out that the ongoing bear market is showing no signs of easing, with stock prices persistently declining day after day.

While Cramer acknowledged that inflation remains a concern, with the Federal Reserve continuing to highlight the issue, he encouraged investors to keep in mind the underperformance of these key sectors.

“This is a market that rewards growth regardless of price. So, people will pay up for tech growth, which is all about real demand and pricing power, and they’re avoiding companies that have lost pricing power and offer yields that are too low to compete with Treasurys. I don’t expect that dynamic to change any time soon.”

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“They spent last year hurting the market and this year already many are in the red. It’s not just a continuation people, it’s actually an acceleration.”

He also highlighted that while tech stocks related to artificial intelligence and advanced computing have helped prop up the market, many other sectors have been facing significant challenges. Cramer singled out industries such as real estate, healthcare, housing, biotech, materials, and food, sectors that underperformed dramatically last year and are showing similar weaknesses this year.

“Bottom line: When you look at these super underperforming stocks, all I can say is, maybe the Fed had better be careful for what it wishes for. Companies that represent a gigantic chunk of the real economy have seen their stocks swoon. Could their earnings be that far behind, and could inflation be running its course a lot faster than expected?”

Our Methodology

For this article, we compiled a list of 7 stocks that were discussed by Jim Cramer during the episode of Mad Money on January 6. We listed the stocks in the order that Cramer mentioned them. We also provided hedge fund sentiment for each stock as of the third quarter of 2024, which was taken from Insider Monkey’s database of 900 hedge funds.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

Target Corporation (NYSE:TGT)

Number of Hedge Fund Holders: 49

Cramer talked about Target Corporation (NYSE:TGT) during Mad Money and here’s what the host had to say:

“Now it is true that profitability may be pinching some of these retailers, Walgreens, Dollar General, Dollar Tree, Target, all of which sell these goods and they’ve all seen their stocks just get crushed.”

Target Corporation (NYSE:TGT), a leading retail chain, has built its reputation by blending digital shopping convenience with an enjoyable in-store experience. However, the company has recently faced challenges that have impacted its performance. The ongoing inflationary pressures have led consumers to reduce discretionary spending, which has particularly affected retailers like Target, known for offering trendy and upscale products. Over the past year, the stock is up less than 1%.

The shift in consumer behavior has made it more difficult for the company to maintain strong sales, especially when compared to its competitors, such as Walmart, which benefits from its more substantial focus on essential products. According to The Wall Street Journal, the company’s sales have struggled as it faces a volatile operating environment. It has resulted in lower comparable sales growth, which tracks spending in both existing stores and online.

Target’s (NYSE:TGT) comparable sales growth has been behind Walmart’s for 11 consecutive quarters, a concerning trend that highlights the difficulties Target faces in the current retail climate. An issue for the company is how to capture market share when consumers are increasingly focused on essentials rather than discretionary purchases like those typically offered by Target.

As Jerry Storch, a former Target executive, pointed out, the company has long been an upscale retailer centered around discretionary items. Although it introduced grocery offerings to diversify its product range, it has not been able to protect sales of higher-margin specialty items as effectively as hoped.

Overall, TGT ranks 7th on our list of consumer goods and retail stocks on Jim Cramer’s radar. While we acknowledge the potential of TGT as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TGT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.