Target has been one of the hottest stocks to own this year, and it still has room to rise even higher.
Target has been one of the hottest stocks to own this year, and it still has room to rise even higher.
The "Magnificent Seven" are a collection of the leading tech stocks on U.S. markets, and they've normally been excellent investments to own. This year, however, as excitement around artificial intelligence (AI) has begun to cool, some of those stocks simply haven't been doing all that well. Tesla, for instance, is down 18%.
The top performer from the group is Apple, which has risen by 26% thus far. That's a great, market-beating return, but it's still nowhere near as good as how one top dividend stock has done: Target (TGT -0.54%). Shares of the big-box retailer are up a staggering 57%.
What's the deal with Target's rally this year? Here's why it's been overdue, and why it may still be worth buying.
Target's valuation has been too low for too long
Although Target's stock has been doing incredibly well this year, in five years, it's still down 39%. For multiple years, it has been performing poorly, and the last time it was in positive territory was in 2021, when it rose by 31%. As consumers have pulled back on discretionary spending, Target's stock has suffered.
Now, however, with a new CEO and the company showing signs of progress in recent earnings reports, the market has begun to pay attention to the retail stock once again.
But to be clear, it's not as if the business is booming. Its growth rate in its most recent quarter (which ended on Aug. 1) was just 5.3%, and the comparable growth rate was only 3.6%. It's also going up against weak comparables, so while its numbers are decent, they aren't amazing.
But when you combine that with its low valuation and high dividend, it has made for a much more compelling investment to own this year, and that's why I believe it can still go higher.
$153.43-$0.83 (-0.54%)
Averytin News Financial update.