Three Risks Facing Target Corporation (TGT) Stock

Perhaps unsurprisingly, with the economy continuing to strengthen and consumer confidence on the rise, Target stock has managed to slightly outpace the S&P 500 index by returning nearly 19% so far in 2013 — even despite its recent plunge. However, should macroeconomic conditions take a turn for the worse here in the states, you can bet Target investors will feel the pain.

3. “If we do not effectively execute our plan to expand retail store operations into Canada, our financial results could be adversely affected.”

That said, the folks at Target recognized the risk of their overreliance on the U.S., so the company opened its first retail stores in Canada during the first quarter of 2013. All told, Target has outlined plans to complete as many as 124 new Target locations in Canada by the time the Christmas shopping season begins.

Naturally, this move inevitably comes with risks of its own, as Target plans to spend around $2 billion on the expansion by the end of next year. In addition, the company will need to work hard to build out its supply chain, hire a massive number of new employees, and successfully market its brand in an entirely new country. Though Canada’s not exactly a giant leap into the unknown, investors will surely be watching closely to see how this new foray turns out.

Foolish final thoughts
While the above risks present a very real threat to Target Corporation (NYSE:TGT)’s operations, I think the company will be able to manage them well as they’ve done for the past few decades. In the end, I remain convinced Target stock still has what it takes to continue to outperform the broader market for the foreseeable future.

The article 3 Risks Facing Target Stock originally appeared on Fool.com and is written by Steve Symington.

Fool contributor Steve Symington has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and Facebook. The Motley Fool owns shares of Amazon.com and Facebook.

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