Target Corporation (TGT): A Bull Case Theory

We came across a bullish thesis on Target Corporation on Max Dividends’s Substack by Serhio MaxDividends. In this article, we will summarize the bulls’ thesis on TGT. Target Corporation's share was trading at $100.50 as of July 31^st. TGT’s trailing and forward P/E were 11.04 and 13.83, respectively according to Yahoo Finance.

Target Corporation (TGT), a Dividend King with 54 consecutive years of payout increases, is navigating one of its toughest periods in recent history. Its stock has declined over 30% year-to-date in 2025 due to soft consumer demand, inventory missteps, and heightened competition from Walmart and Amazon. Despite these challenges, Target remains a resilient income stock, boasting a 4.7% dividend yield and a low forward P/E of ~10–13.5.

The company’s omnichannel strategy—including e-commerce, same-day services, and a $31 billion private-label portfolio—continues to show strength, with digital sales rising 4.7% in Q1. Meanwhile, over 100 million loyalty program members contribute to strong repeat purchase behavior. Target’s newly formed Enterprise Acceleration Office, launched in May 2025, is leading a transformation focused on AI-driven supply chain optimization, cost savings, and urban-format expansion. The company aims to add $15 billion in revenue over five years by strengthening high-frequency categories and leveraging partnerships like Ulta Beauty.

While short-term earnings remain pressured—reflected in cautious 2025 EPS guidance and elevated inventory levels—Target still maintains a payout ratio below 60% and $8.4 billion in buyback capacity, signaling capital allocation discipline. With 86% institutional ownership, sentiment remains mixed, though its valuation appears compelling versus peers. Execution risk remains high, but if the turnaround succeeds, Target could offer both income stability and price appreciation. For long-term investors willing to look past near-term turbulence, Target presents a contrarian opportunity backed by a trusted brand, strong dividend heritage, and clear strategic direction—though patience and risk tolerance are essential.

Previously, we covered a bullish thesis on Target Corporation (TGT) by LongYield in May 2025, which highlighted weak Q1 results, inventory challenges, and digital sales growth. The company’s stock price has appreciated by approximately 6.6% since our coverage. This is because digital strength and cost control offset some concerns. Serhio MaxDividends shares a similar view but emphasizes dividend resilience and turnaround potential.

Target Corporation is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 62 hedge fund portfolios held TGT at the end of the first quarter which was 56 in the previous quarter. While we acknowledge the potential of TGT as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.