E Target: Trading In An Incredibly Tight Channel For The Last 15 Months

Discount retailer Target (TGT) is set to report first quarter earnings results on May 19, and the stock is carrying a lot of momentum in to the report. The weekly chart shows that the stock has been rising within a very tight trend channel over the last 14 months with only a few weeks where the stock has moved outside the channel. I normally only look at the upper and lower rails, but in the case of Target I drew the regression line as well to show how little the stock has veered off course during the time in question.

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TGT Tickeron TM.png

In order to get a better idea of how well the stock has performed over the past year, I looked at Investor's Business Daily Relative Strength Rating and Target scores a 76. This means the stock has been in the top quartile in terms of price performance.

There are some concerns on the chart, mainly the fact that the stock is in overbought territory based on the 10-week RSI and the weekly stochastic indicators. Over the past year the stochastics have been overbought territory for the majority of the time with the exception of the dip in February and March.

The Fundamentals Helped Spur the Rally

The tight channel on the chart is impressive, but it may not be the most impressive thing about Target. When we look at the fundamental screener from Tickeron, we see that the company gets some great marks in five different fundamentals categories. There aren't any areas that get negative marks and only one gets an average rating.

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TGT Tickeron FA Screener.jpg

The one area where the stock gets the highest score is the Profit vs. Risk Rating which is a 4. The SMR rating is a 17, the Valuation rating and the Price Growth rating are both 20, and the outlook rating is 28.

Target has seen earnings grow by 22% per year over the last three years and they jumped by 58% in Q4 2020. Analysts expect earnings to jump sharply for Q1 with the current consensus estimate for EPS of $2.15. Last year showed EPS of $0.59 for Q1.

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William K. 1 month ago Member's comment

Interesting indeed. Other comments elsewhere have mentioned that Target is one of Walmart's serious competitors, and that correlates well with the stated analysis. Of course emotions are also getting into the mix and that makes for all of the jaggedy plots instead of smooth curves. Emotions also probably explain some of tose intense crash dives as well.