Target (NYSE:TGT) and Target stock have enjoyed a tremendous resurgence over the past two years. Over the past decade, the company had suffered from a variety of mistakes and strategic missteps, and many investors wrote it off as a has-been. Instead, Target has reasserted itself as one of America’s most successful retailers. And the novel coronavirus has given the company a chance to show off its rapidly improving e-commerce capabilities.
Target has traded up nicely in recent weeks as investors have realized that it is doing quite well in the current stay-at-home conditions.
That said, other leading retailers like Amazon (NASDAQ:AMZN), Costco (NASDAQ:COST), and Walmart (NYSE:WMT) have also soared during this crisis. Target’s shares still have significant upside to catch up with peers.
Target’s Omnichannel Ecosystem Shines
Target is a premier retailer that excels in both online commerce and bricks-and-mortar retailing. Like many physical retailers, Target was a bit slow to e-commerce. Its infamous credit card hack a few years ago furthered these concerns. Investors dumped Target stock; shares hit just $50 in 2017, erasing all of the company’s gains for the previous decade up to that point.
Since then, however, Target has utterly transformed itself, making for one of the most remarkable comeback stories in retail in ages. Target would not go silently into the night, as the likes of Sears and K-Mart have done.
Instead, Target made surprising and aggressive investments into its digital channels and has now become one of the internet’s retail power players. For investors that missed the transformation up until now, the coronavirus is highlighting Target’s advanced capabilities, both online and in brick-and-mortar stores.
Even though traffic through its physical stores has dropped during the COVID-19 epidemic, its online and hybrid operations are performing well. In particular, the retailer has implemented a robust buy online, pick up in-store channel. When customers order online via the Target app, they can go to their local Target store and pick up the order. Target employees will even bring the order out to their car.
Target says that it benefits greatly in terms of efficiency by using its stores as fulfillment centers, rather than routing deliveries out of its warehouses.
Shipt Is Enjoying Exponential Growth
Target also owns Shipt, a same-day grocery delivery service company that has added 70,000 new shoppers in the last month because of the coronavirus pandemic. As a result, Shipt is on pace to double its number of delivery workers by the end of April.
In fact, Shipt is seeing so much traffic that CEO Kelly Caruso noted they were overwhelmed, saying: “Our shoppers have been delivering record volumes to our customers, yet we know many are finding it difficult to use our services due to high demand.” Obviously, that’s a great problem to have.
Simply put, Shipt, like other delivery operators such as Amazon and Instacart, has been attracting huge demand during the pandemic. This is fantastic news for Target stock, as Shipt had been largely under-the-radar for many folks prior to 2020. Now with the coronavirus, Target and Shipt are having a moment where their product has suddenly reached the mainstream.
Target Stock Verdict
Amazon and Walmart have already advanced 10% past their previous all-time highs. Costco has also reclaimed its pre-virus peak in recent days. Target, by contrast, is still 10% below where it was trading late in 2019, offering it substantial potential for gains as it catches up to other leading retailers.
The coronavirus has greatly shifted the retail landscape going forward. Winners are enjoying an inflection point where they can take huge chunks of market share while 20th century retailing models aggressively lose ground. It’s no wonder that J.C. Penney (NYSE:JCP) announced it was considering filing for bankruptcy last week. As J.C. Penney lurched toward Chapter 11, Amazon and Walmart shares hit fresh new all-time highs.
The retail evolution is occurring at lightning speed now. And Target successfully got its e-commerce capabilities in place in time to attract tons of loyal new customers during the current health crisis. With the foundational shift in retail in progress, Target is one of the big winners, and its shares will trade higher.
Eric Fry is an award-winning stock picker with numerous “10-bagger” calls — in good markets AND bad. How? By finding potent global megatrends … before they take off. And when it comes to bear markets, you’ll want to have his “blueprint” in hand before stocks go south. Eric does not own the aforementioned securities.