Both Target Corporation (NYSE:TGT) and Kohl’s Corporation (NYSE:KSS) are currently in short-term rising trends. That shows these two decimated retailers in the path of the conquering Amazon.com, Inc. (NASDAQ:AMZN) may have plenty to offer investors even in the age of e-commerce.
TGT and KSS stock look good for entirely different reasons, however.
Target seems to have gotten its act somewhat together and learned from the master what it takes to survive in the new world of retail. To be sure, it has a long way to go to effectively compete but every long journey starts with those first few steps.
For starters, did something in August that it was unable to do for a long, long time. Target stock rose following the release of its quarterly results that topped estimates for profits and sales. Same-store sales rose 1.3%, nearly double the 0.7% consensus.
Apparently, the company’s performance is on the right track with increased traffic and most importantly better digital sales, according to Patrick McKeever, an analyst at MKM Partners.
The market likes this news and as we can see in the chart it appears ready to emerge from a long basing pattern. That is just a technical term for the wound licking and resetting of perceptions following a bear market. Target stock is knocking on the door of an upside breakout.
Indeed, traders only offered a knee-jerk decline following news September 8 of a general merchandise price cut. Even the September 25 news of a pending increase in the minimum wage it will pay to workers was met with very little selling.
Good or at least not-bad price action following what could be bad news is bullish.
Following a very volatile few months, Kohl’s also formed a base and earlier this month it actually made its upside breakout move. Rather than fighting Amazon, Kohl’s made a deal with the devil and on September 6 announced it would sell Amazon products like the Amazon Echo in some of its stores.
Then last week it announced it would allow people who wish to return Amazon items to bring them into one of 82 Kohl’s stores in Chicago and Los Angeles. Kohl’s will pack and ship them back to Amazon for free, according to a company press release.
Amazon needs a physical presence to make the return process easier. Kohl’s needs potential customers in their stores and perhaps this is a way to get them there.
We’ll see if this strategy pays off in the long run or even makes the company look attractive for Amazon to purchase outright. But for now, the market likes what it sees and that makes Kohl’s stock look pretty good right now.