Stock Analysis & Ideas

Can Target (NYSE:TGT) Stock Outperform the Market?

Story Highlights

Target stock has a “Perfect 10” Smart Score on TipRanks. It may present a promising opportunity for investors with long-term investment horizons.

Recently, Target Corporation (NYSE:TGT) entered TipRanks’ “Perfect 10” Smart Score list, which includes stocks that have historically outperformed returns of the benchmark index. Given the expectations of robust demand for the company’s products and solid fundamentals, it looks like there is room for upside in the near term. 

TGT stock has gained about 12% over the past six months in comparison to the 5.4% rally in the S&P 500 (SPX) and 9.6% in the Dow Jones Industrial Average (DJIA). 

The big-box retailer has a commendable revenue growth history, as it has witnessed a compound annual growth rate of about 11% over the last three years. The demand for the company’s products should continue to be high in the near term.

Furthermore, Target plans to reduce costs by $2 billion to $3 billion over the next three years, thereby aiding bottom-line growth.

Also, its capital deployment activities are impressive. The company increased its quarterly common stock dividend by 20%, to $1.08 per share in August 2022. The company’s dividend yield of 2.4% remains above the sector’s average of 2.1%.

On the valuation front, the stock seems undervalued. Target is trading at a P/S ratio of around 0.7x, which reflects a discount of 24.4% from its five-year average of 0.93x. This represents a great buying opportunity for investors.

Is Target a Buy or Sell?

Turning to Wall Street, TGT stock has a Moderate Buy consensus rating based on 15 Buys and 12 Holds. The average price target of $175.04 implies an upside potential of 6.34%. Shares have gained about 11% over the past three months.

Moreover, hedge funds have maintained a very positive outlook on TGT stock. Our data shows that hedge funds bought about 4.4 million shares of the company in the last quarter. Bloggers are bullish on the stock as well.

Ending Thoughts

The company’s ability to grow revenues, despite several macro woes and intense competition, is encouraging. Also, Target’s impressive dividend policy makes the stock attractive.


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