Key Points
Shares of Target have fallen 40% over the past year even as the S&P 500 index has climbed around 15%.
While the market is hovering near all-time highs, Target is already in a bear market.
Investors need to watch Target's turnaround, not the general direction of Wall Street.
Target (NYSE: TGT) is one of the largest retailers in the United States. It is also a Dividend King, with over five decades of annual dividend increases behind it. And the business is struggling today, which has resulted in a material decline in the stock price. But it's a no-brainer buy for investors that like turnaround stories even as the broader stock market sits near all-time highs. Here's why.
Target is not hitting on all cylinders
In the second quarter of 2025, Target's sales fell 0.9%, with same-store sales off by 1.9%. Those are not good numbers, given that the business basically shrunk in the quarter. No wonder investors are so negative on the stock, having pushed the shares down around 40% over the past year even as the S&P 500 index (SNPINDEX: ^GSPC) has risen to record highs, up roughly 15%, over the same span.
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The board of directors isn't sitting around hoping for the best. It has brought in a new CEO to shake things up. The revamp will likely take some time, but given the company's status as a Dividend King, it seems likely that it will eventually succeed. After all, you don't create a dividend record like that without working through some rough patches.
What you are really buying here is a turnaround story. And that story will play out regardless of what happens with the S&P 500 index. That is the reason to think that Target is a no-brainer buy, assuming you like turnaround stocks. On the turnaround front it is worth noting that the second-quarter results were an improvement over the first quarter's results, with a notable increase in customer traffic. The worst could, in fact, already be over.
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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy.
