Is Target on the mark?

Target (TGT) has shown up on a number of value screeners in the last few months. The stock has taken a big hit in recent months and looks like it is trading at a discount (hovering in the $50s with a P/E of about 11), but is it a deep value candidate or a trap? Retail is being decimated by Amazon and a slew of smaller, specialty platforms. TGT could be a good buy if it recovers, but will it? I seriously doubt it.

Many retailers are closing stores, and some are in or near bankruptcy. There will always be customers for the super luxury brands. Walmart is also doing well. But those in the middle of the pack are bleeding. Despite its reputation for good design at affordable prices (people even pronounce it tar-zhay, to sound French!), I’m not convinced it will come back. When I visit Target, usually in the peak shopping season between Thanksgiving and Christmas, I am struck by the lack of shoppers. I don’t leave the safety of my home on Black Friday, but I asked the cashier how busy it was and she said not that great.

If you want to take a chance on it, treat it either as an exercise in speculation, or a small part of a deep value portfolio. I don’t see it as a buy-and-hold value play, and personally I wouldn’t touch it.

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