TRADE INSTRUCTIONS
Date: November 17, 2017
Name: Target Corp.
Symbol: TGT (NYSE)
Type: Open
Limit: Buy below $58

TRADE TARGETS
Holding Period: 3 months
Target Return: 8.6%
Annualized Return: 34.4%
Target Price: $63
Stop Loss Level: $50

COMPANY DESCRIPTION
Target operates as a general merchandise retailer. Target Corporation sells products through its stores; and digital channels, including Target.com. As of September 13, 2017, the company operated 1,816 stores in the United States. Target Corporation was founded in 1902 and is headquartered in Minneapolis, Minnesota. Link to company website.

TRADE RATIONALE       
In a sense, this trade is the inverse of the closing transaction for DKS I made earlier today. Both companies recently reported solid third-quarter results but also guided lower for next year’s earnings. While DKS shot up more than 15% after the news, TGT dropped nearly 10% at the same time.

Yesterday’s blowout numbers from Walmart has put the world on notice the Amazon may not be the insurmountable category killer it has been assumed to be. WMT jumped 10 % yesterday on the news, and I believe TGT will also bump higher by reporting better than expected holiday sales results beginning with next week’s “Black Friday” event.

Also helping is the fledgling belief that Walmart’s strong quarter may incite Amazon to accelerate its plans to expand its national footprint of physical store location by buying a major retailer. If so, then Target stands to be a logical acquisition candidate given its extensive footprint of store locations across the country. If that rumor gathers steam then TGT could easily blow through my price target of $63.

Even if there is no credence to that theory, I believe Target’s management team has intentionally talked down its fourth-quarter and 2018 guidance so it can over deliver on results. That’s what Best Buy did for the past two years, and has a 100% gain in its share price to show for it.

NOTE: This stock is optionable.