Target makes it into Josh Brown's Best Stocks list as the retailer's charts show signs of life
(This is The Best Stocks in the Market , brought to you by Josh Brown and Sean Russo of Ritholtz Wealth Management.) Josh — This makes no sense. These companies practically do the same thing for the same customers: Target (TGT) was supposed to be the sexy, up-and-coming growth story and Walmart (WMT) was supposed to be its older, less glamorous cousin. I guess the Walmart folks didn’t get the memo because they didn’t seem to stick to the plot. Over the last year, we’ve seen Walmart rocket 36% higher vs Target’s gain of 7%. Over three years, it’s been 41% annualized vs minus 7% a year. Over the last five years, WMT did 26.33% annualized (I know!) vs TGT’s minus 4% a year. The 10 year number is 22% vs 7%. These stocks do not even belong in the same stadium. So, eventually, shareholders and board directors get sick and tired of being sick and tired and they shake things up. This is one of the benefits of the research we do into the Best Stocks in the Market. I haven’t looked at Target in half a decade, but now the data demands that I do. It hit the list on Tuesday, and we need to know why. I don’t fully trust this company yet, but the trend has my attention. Sean wanted to write it up for our Thursday focus piece this week and so here we are. Target shareholders, welcome back to the Land of the Living. Best Stock Spotlight: Target Corp. (TGT) Sean — Target reported earnings on Tuesday and the stock gapped higher 7% making it the best day for Target since post-liberation day last year. Target had a slight miss on revenue expectations but beat on EPS. Fourth quarter net sales were $30.5 billion, down 1.5% year over year, with Food & Beverage, Beauty, and Toys showing growth, while non-merchandise sales grew over 25%, with membership revenue more than doubling year over year. Target has certainly had its struggles. Prior to this post earnings bounce, the stock was in a 68% drawdown, which is worse than its GFC drawdown of 64% below highs. Following the post-Covid binge in consumer spending in 2021, net income in 2023 fell 60%. Earnings slightly rebounded in 2024 but store traffic was down as multiple controversies and consumer weakness stalled the recovery. Not only did earnings drop, but the multiple investors were willing to pay dropped too. TGTs trailing PE is currently 15x, cheaper than its sector average, industry average, the total market, and its historical valuations the past three, five, and ten year time frames. Target has been in dire need of a catalyst to get the stock to stop dropping. On Feb. 1, Target executed some organizational changes including the installation of a new CEO, new board members and a focus on simplicity and speed. The new leadership team is focusing on accelerated growth, strengthening merchandising authority, and enhancing the guest experience. This new management team is making massive investments back into the business. They are planning 30 new full-size stores in 2026 along with 130 current store remodels which is expected to improve customer experience and drive 2%-4% additional sales growth annually. Interestingly, Target also has a decent ad business. “Roundel” is Target’s retail media network which allows brands to reach Target’s customers using target first-party data. Roundel is described by management as a “margin-rich revenue source” generating $2 billion in revenue growing at mid-teen rates. Target has stated its ambition to double the size of Roundel within the next five years. Price will be the earliest indicator here on if the turnaround is successful. We just saw the stock put in a couple short-term higher lows and higher highs. This will be one to watch if the consumer starts buying vacuums again! Risk management Josh — Target spent most of the last year repairing a long downtrend, but the character of the chart has changed in the last few months. The stock reclaimed its 200-day moving average around $100 earlier this winter and has since pushed steadily higher, now trading near $120. The 50-day moving average has turned up and sits around $108, giving the trend a rising support level that didn’t exist during most of 2025. Momentum has confirmed the move as well, with RSI holding in the low-to-mid 60s rather than slipping back into the weak ranges that defined the prior downtrend. Wall Street is starting to gain confidence, but these analysts have been burned a hundred times by this company. So price targets are mostly right at the current price, in the 120’s or low 130’s. TGT’s previous highs are closer to $175 so if you think they’ve finally figured it out this time, there’s a lot of room. If you’re looking for the clean risk line, a decisive break back below the 50-day around $108 would be the first signal that the rally is losing its footing. If I’m a trader, I’m risking 12 points or 10% on this entry / exit set-up. Below that, the more important level is the 200-day near $99–$100, which marked the major trend reversal earlier this year. As long as the stock is holding above that level and the moving averages continue to slope higher, the path of least resistance remains to the upside. Investors can use $100 as their line in the sand. A breach below on a weekly closing basis means something’s wrong. If you want to go deeper on the new leadership and direction of the company fundamentally, my friend Sara Eisen spent what felt like four hours interviewing new CEO Mike Fiddelke about it last week live from Target headquarters. Watch it below: DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. 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