Buy Target (TGT) Stock For Safety, Growth And Income

Selling returned to the market in a big way recently, with the Nasdaq down 10% off its September 2 highs. Tech stocks and coronavirus standouts such as Tesla (TSLA - Free Report) and Apple (AAPL - Free Report) have been sold as Wall Street takes profits and takes a breather.

The correction seems healthy given the market’s massive run that heated up again in August. Yet the uncertainty of the upcoming election and the spike in options trading could create more volatility in the near-term. Nonetheless, investors might want to stay on the hunt for strong stocks to boost their portfolios, especially with interest rates pinned near zero for the foreseeable future.

Prepared for the Pandemic…

Target (TGT - Free Report), like Walmart (WMT - Free Report) and nearly every other retailer, has boosted its e-commerce and direct-to-consumer business. Amazon’s (AMZN - Free Report) success and expansion plans helped spur the digital commerce push in retail, which prepared many to shine during the coronavirus conditions.  

Target’s expanding portfolio of same-day offerings includes in-store pickup, Drive Up, and its subscription-style Shipt unit. These various options have proven vital during the pandemic, with its Q1 sales up 11.3%. The Minneapolis-based retailer then posted 25% sales growth in the second quarter.

And Beyond…

Target’s Q2 comps also soared by a company-record 24.3%, with digital comps up 195%, and same-day services up 273%. Plus, TGT posted one of its strongest quarters of in-store comparable-store sales on record, up 10.9%. Investors should also note that its operating margin climbed from 7% in Q2 FY19 to 10%, which comes in well above Walmart and Amazon.

The ability to grow both its in-store and e-commerce segment is a great sign because brick-and-mortar retail is hardly dead. In fact, e-commerce accounted for 16.1% of total U.S. retail sales in the second quarter, according to the U.S. Census Bureau. This figure was up significantly from Q1’s 11.8% and the year-ago period’s 10.8%. Yet, many might have expected for e-commerce to be even more popular given the conditions.  

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