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Mr. Market, Walmart, and Target

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Mr. Market strikes again.  WMT is approaching 52 week highs, and TGT is near 52 week lows.  Walmart can do no wrong and Target can do no right!

A year ago, it was a different story.  Target was the darling child of retail, and Walmart was the tired 800 lb. gorilla who was going to fall prey to Amazon’s onslaught.  Back then, Target was reaching a 52 week high and Walmart dropping to 52 week lows.

The retail apocalypse is real.  People are buying online more and more.  However, to believe all physical retail stores are going extinct is extreme.  Many people like to have a physical store to go to and peruse, buy and return items.

In response to the threat from Amazon, Walmart has started a ship-to-store program and a fresh food service, hitting Amazon where Amazon is weakest…a physical presence. Amazon is opening up places to pickup items, showing that online-only isn’t a foolproof route to success.  This is where Walmart has strength with its many stores scattered across the fruited plain.

Well, what about Target?  Target is really the red-headed little brother of Walmart.  All they have to do is sit back, watch and imitate.  They have recently launched a renovation program which you can read about here.  While I love Walmart’s prices, I like Target’s ambiance, which is only going to improve.  They have been improving their online sales, which we have been using as a family.  Can they succeed?  I am placing my bets that it can.

I just bought some TGT today, because the upside is much better as the negative stories about TGT have come out.

TGT numbers:

  • Price: 56.25
  • 52 week range: 52.72 – 79.33
  • PE: ~12
  • Dividend Yield: 4.13%
  • Return on Equity: ~25%

WMT numbers:

  • Price: 76.11
  • 52 week range: 62.72 – 77.05
  • PE: ~17
  • Dividend Yield: 2.66%
  • Return on Equity: ~20%