Target Corp (NYSE:TGT)

CAPS Rating: 3 out of 5

The country’s second-largest discount chain, Target shoots to be more upscale than rivals with a focus on design.

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Member Avatar BCNMatador (60.08) Submitted: 8/20/2014 2:29:27 PM : Underperform Start Price: $60.68 TGT Score: +0.66

Everyone I know who used to shop at Target now uses Amazon Prime

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Member Avatar FloydParks (35.36) Submitted: 8/16/2014 5:56:57 PM : Outperform Start Price: $58.05 TGT Score: +2.85

Dividends will become increasingly valued in the next few years

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Member Avatar trondaddy (91.37) Submitted: 8/16/2014 3:37:16 AM : Outperform Start Price: $58.05 TGT Score: +2.85

Decent dividend. Ready for a comeback after a few stumbles brought the price down. Target isn't going anywhere for awhile.

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Member Avatar pchop123 (79.60) Submitted: 8/5/2014 2:13:15 PM : Underperform Start Price: $58.17 TGT Score: -0.02

loser

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Member Avatar notyouagain (29.67) Submitted: 8/1/2014 9:27:27 PM : Outperform Start Price: $60.78 TGT Score: -0.84

Here's to laughing at the red thumbs with their shortsighted short term outlook.

Target has had some negative PR...that's a good time to take advantage of its backing off its 52-week high, right?

I don't have my calculator with me while I'm sitting here in the hospital waiting room waiting for my girlfriend to get a CAT scan, so I can't bore you with my usual numbers. I'll just have to rely on published ones.

Target has increased its dividend... year in and year out.... for 42 years straight. Think about that. The quarterly payment for September will be $0.52.

The quarterly payment previous to that was $0.43.

I don't need a calculator to figure this to be about a 21% boost.

And the payout ratio is still about 56%, according to the Fool.

With a 5-year dividend growth rate of 21.65%, the rule of 72 suggests this dividend would DOUBLE in less than four years.

Let's be skeptical. Let's say the dividend growth is slowing down and it doubles in SIX years (a 12% average dividend growth rate).

Think it'll be selling at $60/share with a $4.16 annual dividend?

The only way that'll happen is if Amazon truly does take over the world and all the brick-and-mortar stores are failing.

Anyway, back to that "rule of 72".

If you've never heard of it, it's can come in handy. If you're wondering how long it would take for an investment or a number to double at a given rate of annual growth, you divide that rate of growth into 72. The result is about how many years it would take for that number to double.

Conversely, you can divide the number of years into 72 and the answer will be roughly the growth rate needed for a number to double in that many years.

Anyway, hovering at around $60 and paying an annual dividend of $2.08 gives us a current dividend yield of about 3.5%. Target's average dividend yield over the last five years is 2.2%. Getting into a stock at a higher than average yield has two advantages.

One, I've always considered the dividend yield one of many value metrics. A higher dividend yield might be signaling a good buy just as a lower PE does. At a lower price, you get a higher dividend yield and a lower PE.

Two, buying when the dividend yield is at 3.5% vs 2.2% gives you more bang for your buck, no two ways about it. It jump-starts your returns and for the same money invested, your dividends will be higher, and so your reinvested dividends will buy more shares. You get faster compounding.

Look at it this way. Since the average dividend yield for Target was 2.2% during the last five years, there may be people who bought shares a year or two ago and have held them through two dividend increases that still aren't getting a 3.5% yield on their original price paid yet.

Target has an interest coverage of 7, so they earn about $7 for every dollar they pay in interest expense. That isn't spectacular but it's nothing to be concerned about.

Taking a conservatively skeptical view and assuming this dividend will only grow at a 12% growth rate as I did earlier really is probably leaning towards being ridiculously conservative.

When this dividend has doubled, this will not be a $60 stock. If it was, then it would be yielding almost 7%, and unless the company's in big trouble, that just isn't going to happen.

See my Microsoft pitch for more thoughts on how and why share price growth tends to rise pretty much in step with dividend growth.

Target has a beta of 0.55, which, like most of my picks, means that while it probably won't go up as fast as the rest of the market, it will probably tend not to fall as fast or as far either.

That's fine. Slow and steady is fine. Not trying to outsprint anyone here.

My start price, something I always like to note before the first dividend payout changes it, is $60.78.

Target has a current ratio of about 0.90, which I will fly in the face of conventional wisdom warning people about current ratios of less than 1 and say I'm fine with it.

Those of you who have read "Warren Buffet And The Interpretation Of Financial Statements" will understand why that doesn't bother me.

Those of you who haven't read it... get it. The authors are Mary Buffet and David Clark. The book is awesome. If you want to buy individual stocks you need this book on your shelf.

That's it. This is a long term pick, but I won't be surprised in the least if some of the geniuses around here are on my case to admit I blew it in less than eight months.

Long term, smart guys. Come bugging me in five years about it.

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Member Avatar SkepikI (71.71) Submitted: 7/2/2014 8:49:21 PM : Underperform Start Price: $59.12 TGT Score: -1.48

Just breaking out of its disastrous flirt with identity theft and compromised data, just breaking in new management in an improving retail market, TGT serves up a needless insult to some of its customers, AND fumbles not only the decision on firearms, but its explanation and PR implications.
Regardless of your opinion on the 2nd Amendment, or firearms in general, you ought to consider this was a totally unnecessary self-inflicted wound.... TGT needs EVERY customer it can get. Charging off even under a threat from an anti gun group is a miscue of the first order. The downward spiral announced earlier in the year, will continue. More people will find reasons to avoid Target. What will idiot TGT management do next? Spit into the wind?

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Member Avatar TheValueDude (48.82) Submitted: 6/23/2014 3:03:00 PM : Outperform Start Price: $58.36 TGT Score: +1.77

FCF Cow screen. Verge of a turnaround?

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Member Avatar buzz02 (93.40) Submitted: 5/30/2014 10:24:30 AM : Outperform Start Price: $56.29 TGT Score: +3.80

Over reaction to Canada and credit card issues to the negative

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Member Avatar GirlScoutDad (95.78) Submitted: 5/28/2014 10:39:24 AM : Outperform Start Price: $55.47 TGT Score: +4.70

Now (May 2014) is not really a great time to take a new, long position in Target because they haven't yet picked a new CEO nor begun the turnaround, but I just love Target (compared to the other big box stores), and their dividend is above 3% and still growing (for now), so I feel the downside is probably limited!

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Member Avatar Djkman100 (65.70) Submitted: 5/9/2014 8:28:40 PM : Underperform Start Price: $58.85 TGT Score: +2.88

Bye, bye, target Canada

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Member Avatar SnowBawl (< 20) Submitted: 4/23/2014 8:47:25 AM : Outperform Start Price: $59.88 TGT Score: -5.16

Sell 66-70 Markman

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Member Avatar ccivin (56.32) Submitted: 4/4/2014 1:43:40 PM : Outperform Start Price: $60.93 TGT Score: -7.34

The security breach was annoying, but just a blip. TGT is here to stay.

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Member Avatar JamesBrown (65.28) Submitted: 3/19/2014 4:47:42 PM : Outperform Start Price: $59.09 TGT Score: -4.71

Rising dividends

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Member Avatar Mystic (< 20) Submitted: 3/9/2014 5:50:26 PM : Underperform Start Price: $60.37 TGT Score: +5.91

Company is going to continue to suffer from image issues for the months to come, much like BP did for months after Gulf Oil Split. In the end it will regain its position. Target is also suffering from a Leadership void.

http://www.darkreading.com/attacks-breaches/target-begins-security-and-compliance-ma/240166451?cid=NL_DR_Weekly_240166451&elq=ba4b21883039429595bc1c6decd0aeed

Corporate Leadership needs to clean house, reorganize, and deal with securing its supply chain to bring confidence back

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Member Avatar Dividends500 (73.84) Submitted: 3/8/2014 9:24:39 PM : Outperform Start Price: $54.31 TGT Score: -2.22

Dividends500 tracks the 200 strongest dividends in the S&P 500. To qualify as a strong dividend, the company must meet two simple requirements:

- A payout ratio below 50%
- An increasing dividend from the prior year

Because there are more than 200 dividend paying companies in the S&P 500 that meet these requirements, the qualifying companies with the largest dividend yields were chosen.

Dividends500 intends to test this FactSet article, which highlights these strong dividend paying companies and their outperformance versus the S&P 500 as a whole (Page 12).

http://www.factset.com/websitefiles/PDFs/dividend/dividend_12.16.13

If you have questions or see something you think is inaccurate feel free to let me know.

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Member Avatar ehensim1 (99.75) Submitted: 2/25/2014 10:43:44 PM : Outperform Start Price: $58.15 TGT Score: -3.71

Buy good companies in hard times.

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Member Avatar Sherefoy (53.48) Submitted: 2/13/2014 1:58:43 PM : Outperform Start Price: $56.18 TGT Score: -1.25

Expansion plans and credit card issues will be resolved in time

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Member Avatar ThinLine (< 20) Submitted: 2/11/2014 11:20:05 PM : Outperform Start Price: $56.32 TGT Score: -2.05

Target is a well stocked venue, clean and updated. Management has responded efficiently and expediently to the same kind of breach that ocurred at Nieman Marcus. New stores going into Canada coupled with competitive pricing, good inventory, and a pleasant environ makes this recent low a no brainer.

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Member Avatar WPThatcher (47.46) Submitted: 1/20/2014 10:37:59 AM : Outperform Start Price: $58.20 TGT Score: -4.04

Trading just a hair above its 52-week low; the security breach problems shall pass.

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Member Avatar FoundryOnStocks (33.28) Submitted: 1/15/2014 9:18:15 AM : Outperform Start Price: $60.94 TGT Score: -9.06

$73.44 price target by January 2015.

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