11/15/2011 3:26 PM ET|
How Target is gaining on Wal-Mart
Time will tell, but . . .
Target experts aren't too concerned. They argue that the strategy will take time to pay off. "I think it's still early," says Regina Lombardi, an analyst who follows Target at BBH Core Select Fund (BBTEX).
She thinks this Target game plan, along with a few other initiatives like expansion into Canada and the rollout of smaller-format stores over the next few years, will boost the retailer's earning power enough to suggest that the stock currently trades "significantly" below its intrinsic value. She won't say by how much, but this discrepancy explains why her investment firm took a position in Target last summer. Lombardi is worth listening to, because the fund she works for significantly beats competitors over the long term. It has a five-star Morningstar rating, the highest possible mark.
Trading for 12 times earnings, Target also appears cheap to David Abella who manages Rochdale Dividend & Income (RIMHX), which beats competing funds nicely. Target's median price-earnings ratio over the past several years is around 15, which suggests it may be inexpensive right now. The price-earnings ratio, which compares stock price to earnings, is a common measure of a stock's value.
Abella says he's looking closely at Target and may consider a purchase once there are more signs that Target sales and the economy are getting better. If the economy improves, Target stock "could be quite strong for a while," he says. "It's not something you have a one-month window to get into."
One problem to watch is Target's website. Last summer, when Target moved its website off servers run by Amazon.com (AMZN, news), the site suffered severe outages. It seems to be working better now, but we're dangerously close to peak holiday sales season, starting just around the corner with Black Friday. And the problems have been cropping up at a time when Target is trying to promote its site by offering REDcard holders free shipping. "They've got a lot of work to do in online sales," says Davidowitz. "But I look at it as potential."
That might be. But if Target doesn't get all the bugs out of its Website, Black Friday -- the day after Thanksgiving -- could give Target's cute mascot dog a black eye instead of the red ring it currently sports.
At the time of publication, Michael Brush did not own or control shares of any company or fund mentioned in this column.
Michael Brush is the editor of Brush Up on Stocks, an investment newsletter. Click here to find Brush's most recent articles and blog posts.
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I shop at Walmart, some are nicer and cleaner than others, especially where I live in FL.
I am guilty of shopping at Walmart, they have the lower prices and these days we have to watch every penny. I am not thrilled with Target everything is much higher in prices whether groceries or their clothes. I like a one stop shop idea. I don't like traveling from one store to another.
Target is nicer and cleaner of the two, they just need to lower their prices.
As for keeping the stores open on Thanksgiving that is ridulous, none of these stores need to be open on Thankgiving or X-Mas Day. I can remember years and years ago, all stores were closed on Sundays, and Thanksgiving & X-Mas even closed early the night before, this gave employees a day off to enjoy their families. These stores are not happy making a profit, they get Greedy and the employees suffer.
I would like to see that these 2 stores will start buying made in the USA. I go out of my way to find those items. We need to bring back the American jobs in our country.
Please explain...inquiring minds would like to know.
My wife and I have shopped both stores and on every occasion, we have always preferred Target to Wally World. Target is always cleaner, always more organized and unfortunately I have had as much as I can tolerate of Wall Mart clientele. Other issues like cashier availability, long lines and store personnel attitude are night and day, with Target always ahead of Wall Mart. That is just the surface. IMO.
All for Profit and more profit and record setting years and never being happy with a healthy return only if it is more than last and the employee gets......no more than last year..
My experience with Target is that their employees are intelligent, positive and happy to see you as a customer. This is how Walmart got their start. Now Walmart employees are sullen, angry and uninterested in serving their customers. The experience of shopping between Target and Walmart is at opposite ends of the spectrum. While price is important, I'll pay a few cents more to patronize a business that believes in customer service.
For the record!!!! Target is an American owned store that sells American made merchandise.
Wal-Mart is is largest importer of goods from China. Has several special ships charring goods from China, Malaysia, etc arriving each day to dump their goods on wal-mart shelf's. the ships return to their country EMPTY! NO AMERICAN EXPORTS!.
Most every thing you need is made in America. ABC news has a complete list, and I thinks msn- google does also. When you go to purchase any merchandise ask "Please show me only the product's made in America" not the stuff where they only sew the label on in America.
It is time to get smart, If you want better living, good wages and a better future, Buy American and get rid of all the politicians that signed the pledge to work for corporations not Americans.
Wal-Mart's sales are slipping for one simple reason. Their customer service sucks, big time. Case in point: Awhile ago I purchased tires from their website. On the receipt, it clearly said to go to the Tire and Lube Center to pick them up. So, having excellent reading comprehension skills, that's what I did. Well, the clerk there acted as if I had kicked his puppy, rudely telling me I had to report to customer service to sign for them. God forbid he pick up the phone and have them brought to him! By the way, if people are thinking this was an isolated incident, it's not. I find their employees to be either apathetic to their customers needs or so wrapped up in their assigned tasks helping customers is an annoyance.
Until Wal-Mart loses this delusion that they're the only game in town, that people should be grateful to shop there, they have nowhere to go but down.
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