Target (TGT)
Target’s earnings per share jumped almost 50% last year to $8.94, while its operating income surged by nearly $2 billion in 2023. Additionally, its operating margin came in at 5.8% during the holiday season, up from 3.7% during the same period a year earlier.
The company has launched a service known as Target Circle 360. The service will be similar to Amazon’s (NASDAQ:AMZN) Amazon Prime and Walmart’s Walmart+.
Specifically, Target Circle 360 will offer members free same-day or two-day delivery for orders over $35 — in potentially as little as one hour.
Amazon Prime and Walmart+ have successfully increased online sales for the two retail giants. I expect TGT to benefit from a similar trend in the medium and the long term.
In February, Goldman Sachs added TGT stock to its Conviction List, citing the retailer’s ability to benefit from strong consumer spending trends and its low valuation.
Walmart (WMT)
Walmart’s top line rose by an impressive 5.7% last quarter versus the same period a year earlier, while its global ecommerce sales surged 23% year-over-year. Moreover, its operating income soared 13% year-over-year.
The large increase in its e-commerce sales indicates that its Walmart+ subscription delivery service is helping the firm and bodes well for the company’s longer-term outlook.
Moreover, WMT has become a leader among retailers when it comes to utilizing AI. The firm’s extensive AI initiatives should help cut costs, streamline customer acquisitions and better serve its existing customers.
Citi recently included WMT in its list of “recommended large-cap stocks.” The shares have a very low enterprise value/Revenue ratio of 0.82 times.
TJX Companies (TJX)
TJX Companies’ (NYSE:TJX) stores may not be traditionally viewed as big-box retailers.
But its Marshalls stores are fairly large. Moreover, in my experience the firm often places TJ Maxx stores right next to Home Goods stores. This creates a shopping experience somewhat akin to what Target and Walmart provide.
What’s more, like Target and Walmart, TJX’s stores offer low-cost products that entice huge numbers of consumers..
Meanwhile, in a note to investors, investment bank Jefferies predicted that TJX could benefit from Macy’s store closures.
Further, TJX showed confidence in its own outlook by recently raising its dividend by 13% and pledging to carry out $2 billion to $2.5 billion of share buybacks in fiscal 2025.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines
Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been SMCI, INTC, and MGM. You can reach him on Stocktwits at @larryramer.