7 Best Department Store and Discount Retailer Stocks to Buy

3. Target, Corp. (NYSE:TGT)

Number of Hedge Fund Holders: 52

Target (NYSE:TGT) is an American retail giant that operates a chain of discount department hypermarkets and stores, with around 2,000 stores across the US and Canada. It was one of the top-performing stocks in the pandemic, experiencing increasing growth with its Drive Up curbside pickup program. However, the company’s business fell with increasing inflation and changing consumer spending patterns due to high interest rates.

Investors looking for signs of a comeback were pleasantly surprised with Target’s (NYSE:TGT) Q2 2024 earnings report. Comparable sales grew by 2%, and traffic growth increased by 3%. With traffic growth in all six merchandising categories of the company, customers seem to be coming back to Target (NYSE:TGT). Sales in apparel, one of its key categories, rose by 3%. Its discretionary categories comprise a significant portion of its revenue and are also improving.

Target (NYSE:TGT) is trading at a P/E ratio of 16.17 at a 9.30% discount to its sector. Its revenue grew by 2.7% to $25.2 billion, along with several other bottom-line improvements in the most recent quarter. For instance, its earnings per share exceeded analyst estimations of $2.18, going to $2.57. The company also increased its earnings per share guidance from $8.60-$9.60 to $9.00-$9.70. In addition, Target’s (NYSE:TGT) net income grew by 26.54% since last quarter and 48.85% since last year.

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 third on our list of the 7 best department store and discount retailers 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.”