Target (TGT) has been on a rip for years now (basically ever since the credit card breach many years ago now, and since they pulled out of Canada in 2015). Target is also the retailer positioned best for the current season (back to school season, which will be the biggest one in a while — re: covid). Historical trends have August and November as their biggest months for the stock upward movement and sales.
However, this is NOT a reopening play, covid play, or any of that garbage. This is about fundamentals and the future of the retailer. Target also trades at “only” ~20 P/E and has been in that more reasonable range for years. WMT is 32 P/E. Costco is 39.
TGT is in the process of redesigning their stores to be better setup for customer pickup and more importantly, gaining even more share of the market with online ordering. Their online retailing already has tons of momentum (see news surrounding their Q1 earnings, which they crushed), but they will be even better after the redesigns are done. Stores will be used as “mini warehouses” to get things to customers fast. They are already doing this, but the redesign is intended to be better setup around this premise specifically. Currently they are doing things with a system that is at least 5-10 years old.
Take note at your local stores, you will begin to see the changes in the coming months. It’s a massive investment they are making.
If you browse on over to r/target you will find countless millennials (Team Members) talking about just how slammed they are — they never slowed down before, during, or after covid. Reading those posts is great DD (read: confirmation bias). 30-40 year old women are [still] in full force in their yoga pants buying everything their middle to upper class life desires. It is set to be an amazing back to school season for the retailer.
Employees at the Target HQ in Minneapolis are still working from home and will be for a while yet as they sold much of their office space in downtown Minneapolis during the pandemic.
Just today, there was a $28M order placed after hours (113,000 shares at $257.01/share), and a few 1-3M orders at the same price. Institutions are getting in bigger.
Earnings are in August and they are expected to crush it again. This is a longer call play, LEAPS if you want to play the full effect of the store redesigns. But OCT 21 and JAN 22 calls are ripe to print.
I have 75% of my portfolio in OCT 21 $270 strikes and couldn’t feel better about the position. I’m playing back to school and earnings big time. I don’t have a position for the holiday season yet (Nov-Dec) but I’ll be loading up the rest into JAN 22 for that, $270 or $280 strikes there.
The stock has a few typical patterns it follows lately (a couple up/downs in the morning then a rip… this week it has been up in the morning, then a pull back, followed by a slight recovery, then a slow bleed, leading to a strong end of the day — there is always tons of activity in the last ~15 minutes… often to the downside).
This article was written by u/zissou_society