Is Target Corp. (NYSE:TGT) part of your portfolio? If not, then this is the right time to add the stock as it looks very promising. Moreover, the underlying factors are capable of carrying the momentum further. The stock, which carries a Zacks Rank #2 (Buy), has surged roughly 14% year to date and hit a 52-week high of $85.81 yesterday, thereby demonstrating its inherent strength. The company has a long-term earnings growth rate of 10.5%. We believe that it could prove to be a solid bet for investors.
Target’s initiatives, including the development of omni-channel capacities, diversification and localization of assortments along with emphasis on smaller format stores, bode well. The company has also adopted an aggressive cost-reduction strategy. It had earlier unveiled plans to achieve $2 billion in annualized costs over the next two years through rationalization of operations, supply chain, technology and process improvements.
The stock appears compelling from the earnings perspective too, as it continued with its positive earnings surprise streak for the third straight quarter. In the trailing four quarters, the company has outperformed the Zacks Consensus Estimate by an average of 6.1%, including a positive surprise of 6.8% registered in the last concluded quarter.
The company’s first-quarter fiscal 2015 earnings of $1.10 per share beat the Zacks Consensus Estimate and surged 19.6% year over year. Total sales increased 2.8% year over year to $17,119 million and came ahead of the Zacks Consensus Estimate of $17,079 million.
Target winded up its Canadian operations after a comprehensive evaluation. The company believes that the closing of operations will be accretive to its earnings, going forward as this will enable it to deploy resources solely in the domestic markets and focus on developing its omni-channel capacities. Performance in the U.S. has already started to improve given the company’s overhauling drive.
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Investors interested in the retail space may consider other well-ranked stocks such as G-III Apparel Group Ltd. (NASDAQ:GIII), sporting a Zacks Rank #1 (Strong Buy), Columbia Sportswear Company (NASDAQ:COLM) and Carters Inc. (NYSE:CRI), each carrying a Zacks Rank #2.