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26 pts

Opinion on  Target Corp (TGT)     Sector: Services  >  Industry: Retail (Department & Discount)
TGT: What's not to love?

Jan 08, 2007 09:13 PM GMT
Return Risk
+6.18% HIGH
Sr. Analyst

From cute commercials to well-lit, well-organized stores to products that people really want to buy, Target is a well-run retail company that keeps itself hip yet relevant in the customer's shopping mind.

Products I really like that I find at Target:



1. C9 by Champion for men


2. Mossimo


3. Target's bedding lines


4. Cliff Bars (the cheapest by far, even cheaper than TJ's)


5. Dollar store - every so often, I'll find something really useful there like flipflops, squeegees, polycarbonate water bottles, and batteries


6. Market - Archer farms, wine cubes, etc.


7. Timex Ironman watches


8. Wine bags


9. Infant lines




Things I wish Target would improve on:




1. C9 line for women could be better. Some of the stuff you get look like scrubs, not workout gear


2. Automotive - this section is extremely limited, at least at the targets I have been to.


3. Target still suffers some amount of trivial theft. You see it in open boxes missing parts, or ripped tags lying around the floor. As an investor, I find such theft worrisome.




Also, store management at Target is quite good. I can usually find people working at the store who know where things are located. Clothes are usually folded nicely, items placed in the correct bins, with the correct price tags, and so on. Shopping carts are in-store and the people hauling carts back from outside use powered cart pushers - nice. Lastly, checkout lines are usually short, even in the busiest of times. In fact, sometimes I can check out faster when the store is busy because new cashiers show up out of nowhere.

Seasonal staff though tends to be hit or miss, which to be honest is about par for the course. If you were planning to work at Target for only two months, would you really put in the time necessary to understand how the store products are laid out? Would you go the extra mile to serve the customer?


Update 01/16:

Everything in the store that was left over from the Christmas season was gone one week after. Hot items like the outdoor electric reindeers disappeared the day after Christmas. Now the store is gearing up
for Valentines...


Update 01/22:

Target Corporation declared a quarterly dividend of 12 cents per common share payable March 10, 2007 to shareholders of record February 20, 2007.



The company should declare another 12 cent dividend in April followed by hopefully 14 -16 cent dividend in July, 2007.  Target's dividend yield isn't great but at least it is growing at 15-20% per year, comparable or slightly higher than WMT to my naive eyes.


Update 02/08:

Watching Target stock move is decidedly less entertaining than watching Target commercials. No scandal-driven swings in price, no exponential rise, just the occasional blip in a rising stock price coupled with the steady rise in the dividend stream.



As for the stores where I live, I'm excited about the world market section that has been around for a couple of weeks and the Choxie premium chocolate line that is strongly advertised before Valentines. With fairly non-standard flavors like coconut dulce, raspberry lemon biscotti, sea salt caramel packed in bars or truffle balls, Choxie (chocolate with moxie?) chocolates are a strong alternative to Trader Joe's or See's Chocolates.


Update 03/21:

Target announced that it anticipates results for March will show a jump at a rate in the double digits driven primarily by electronics, health care, infant, and food.

Target also said it ended February with inventories in "a very good position."

With Easter being early this year (April 7), March should also get a more immediate Easter boost.

Some of the Targets in my area have really expanded their food section. With expanded cereal sections, more offerings in their Archer Farms line, and so on, it will be interesting to see how food as a category adds to TGT's bottom line.


TGT:  This call was made on 01/08/07 @ $57.37
Rating:   Positive   $57.37 (01/08/07)
Gain/Loss:   -15.79% in 1059 days (+0.84% from dividend)
Target:   $62.00 (+8.07%) in > one year
Allocation:   7.9% of portfolio


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Who voted on this idea?
Weiting Liu 50% 01/09/2007



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