10 Best Discount Retailer Stocks to Buy

4. Target Corporation (NYSE:TGT)

Number of Hedge Fund Holders: 52

Target (NYSE:TGT) is an American retail corporation that operates a chain of discount department stores and hypermarkets selling virtually everything, from clothing and groceries to electronics, sports, entertainment, and other general merchandise. It currently operates around 2,000 stores across the United States and plans to open more than 300 stores in the coming decade. In August alone, Target (NYSE:TGT) opened four new stores in Florida, South Carolina, and Texas.

Target’s (NYSE:TGT) EPS for Q2 2024 exceeded expectations by reaching $2.57, showing a 42% growth over last year. Its comparable sales grew by 2% in the same quarter, driven primarily by increased traffic. Apparel was one of the leading growth drivers, with comp sales rising by more than 3% due to the incorporation of newness, innovative design, and quality. The company’s All in Motion brand grew by resonating with a broader audience. The beauty and food and beverage sectors also drove growth, experiencing increasing consumer engagement due to increased variety. Target slashed prices on around 5,000 of the most frequently purchased items over the summer, further seeing increased sales.

Overall, Target (NYSE:TGT) is focusing on controlling what can be controlled and is directing attention to strong execution and retail fundamentals. It is also working on expanding its operating margin rate, aiming to move beyond its pre-pandemic annual rate of 6%. The company is also committed to continued disciplined capital deployment.

Target (NYSE:TGT) is trading at a P/E ratio of 16.17 at a 9.30% discount to its sector. It sports a consensus Buy rating among analysts, with its median price target of $153 presenting an upside of 17.17% from current levels. As of Q2 2024, Target (NYSE:TGT) is held by 52 hedge funds, with Diamond Hill Capital holding the highest stake worth $458.13 million. It ranks fourth on our list of the 10 best discount retailer stocks to buy.

Carillon Eagle Growth & Income Fund stated the following regarding Target Corporation (NYSE:TGT) in its Q2 2024 investor letter:

“Target Corporation’s (NYSE:TGT) sales continue to feel the consumer softness in discretionary goods. In addition, while margins are recovering, they are not up to expectations. Encouragingly, sales are sequentially increasing and comparable sales are expected to get easier as Target enters the back half of the year.”