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On Target, Despite Setbacks

05/24/2016 8:00 am EST


Mark Skousen

Editor, Forecasts & Strategies, High-Income Alert

Warren Buffett once said the best time to buy a company is when it has a one-time, large but solvable problem. I couldn’t agree more, asserts Mark Skousen, editor of High-Income Alert.

That’s why I’m recommending Target Corporation (TGT). Based in Minneapolis, Target is a discount retailer that provides high-quality merchandise at competitive prices in more than 2,000 clean, spacious stores. 

It has done much to cement local ties, including donating more than $4 million a week to local communities through the Target Foundation. 

Those dollars go toward fighting hunger, aiding disaster preparedness, supporting the arts and improving high school graduation rates.

The company offers a diversified product line. Roughly a quarter of total sales are health and beauty items and other household essentials. 

Twenty percent is food and pet supplies. Twenty percent is apparel and accessories. And home furnishings and “hardlines” (computers, cameras, etc.) make up approximately 18% each.

Target combines a unique assortment of design partnerships, select national brands and a broad portfolio of owned brands, all offered with its trademark promise: “Expect More. Pay Less.”

This isn’t just talk. The company even extends its Price Match Guarantee to online competitors.

Last year, Target announced plans to close its 133 retail stores in Canada. But it continues to open new stores across the United States.

However, this development has been overshadowed by the company’s recently announced policy of allowing transgender people to use the restroom or fitting room that corresponds with their gender identity.

In reaction, some groups called for a boycott of the store. While this has become a hot topic recently, it is not new; transgender people have been using the restrooms and fitting rooms that match the way they are dressed for decades.

I expect the issue to die down soon, especially as more and more retailers adopt similar policies and customers will return to Target for its good value. And while we wait for the stock to bounce back, you’ll collect a 3% dividend, too.

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By Mark Skousen, Editor of High-Income Alert

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