Here’s what I like about Target Corporation (NYSE:TGT): Its stores have most of the everyday stuff I need, there’s a store down the street and prices are very reasonable — even downright cheap. Regrettably, that does not mean TGT stock is a good investment. In fact, in the current environment, it’s a downright lousy one.

Same-Store Sadness

The most important metric for any retail store is same-store sales and, in the case of Target, that metric is awful. The last fiscal quarter of TGT earnings delivered comparable store traffic increases of 1.4% and comp sales increases of 0.9%. That’s not good news. It says that TGT is making minuscule inroads with consumers. Third-quarter net income also fell a whopping 21%, to $480 million.

TGT stock has a lot of things going against it — and that’s why you should stay away from it. One of the primary problems is that Target management seems oh-so-very-concerned about appearing politically correct — at least as far as wages are concerned — rather than running a business.

TGT said it will increase its $10 minimum wage by 10% to $11 per hour, and get to $15 per hour by 2020. This is a big mistake, because this is unskilled labor, which the market has a great supply of. Sure, if TGT can attract better workers with higher pay, and that leads to higher and more efficient productivity, then it’s a good use of capital.

But TGT doesn’t need very many workers at $15 per hour to do what needs to be done.

Stiff Competition & Pricing Pressure

The other problem TGT management is dealing with is competition and price wars. Target sells commodities. There’s nothing special about what Target sells; thus, it has to compete on customer service, convenience and pricing. Customer service is better at Target than at Wal-Mart Stores, Inc. (NYSE:WMT), but Target cannot top Amazon.com Inc.(NASDAQ:AMZN) nor that company’s Prime services.

Target can’t compete with Amazon on pricing; however, it can compete on convenience. There are enough Target stores that getting things one needs — right away — is possible, and that beats out Amazon.

Well, as if margins aren’t already under enough pressure, now TGT is cutting prices on thousands of items. It hopes to make up in volume what it loses in revenue.

Needless Capital Expenditures

The other thing I don’t like about TGT stock is that management has decided it is going to spend a whopping $7 billion dollars to renovate stores. I’m all for spending money on stores that truly need it, but unless stores are crumbling, that’s a terrible use of capital. How does this get more people into the stores? It only works in those areas where the stores truly are a disaster, and I doubt there’s $7 billion worth of disasters out there.

Bottom Line on TGT Stock

The good news is that TGT stock is in financially good shape. It makes a lot of money — $2.6 billion over the trailing twelve months. It makes billions of dollars in free cash flow and has $2.7 billion in cash. The TGT stock dividend is 4%.

However, earnings per share is declining and investors pay for growth. Why pay 14 times earnings for a company that is not growing its earnings? Sure, the 4% yield is attractive, and it has great cash positioning, but with the market overvalued and retail struggling, I think you wait for a 10% decline (at least) and then perhaps buy with a tight stop-loss.

Otherwise, wait for an even larger decline. At 8-10x EPS, you have a possible bargain.

Lawrence Meyers is the CEO of PDL Capital, a specialty lender focusing on consumer finance and is the Manager of The Liberty Portfolio at www.thelibertyportfolio.com. He does not own any of the aforementioned stocks. He has 22 years’ experience in the stock market, and has written more than 1,600 articles on investing. Lawrence Meyers can be reached at TheLibertyPortfolio@gmail.com.