Target Corporation (TGT) or Staples, Inc. (SPLS)?

Staples, Inc. (NASDAQ:SPLS) is leaning out its brick-and-mortar business, not completely — but effectively. Web sales grew just 3%, in line with last year’s gain, but it gives the company a tremendous advantage over its fellow home office big-box stores.

Target Corporation (NYSE:TGT) is, over the long-run, a successful retailer experiencing short-term drama. The macroeconomic situation is unfavorable, and the retail climate has hurt all players. Coupled with the expensive Canadian start-up costs, it makes the company look in worse shape than it actually is.

Overall, though, Staples, Inc. (NASDAQ:SPLS) is the more appealing pick here, based on valuation and its well-protected business. Analysts’ concerns over whether Staples can continue to grow are largely unfounded — sure, the physical locations are rather stagnant, but the Web business will continue to grow. At just 10 times forward earnings and 10.4 expected free cash flow, the company is more attractively priced for the value-conscious investor.

The article Quick Draw: Target or Staples? originally appeared on Fool.com and is written by Michael Lewis.

Fool contributor Michael Lewis has no position in any stocks mentioned. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com and Staples. 

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