Why Target Stock Gained 17% in November

What happened

Target (NYSE: TGT) stock trounced the market last month by jumping 17% compared to a 3.4% boost in the S&P 500 index, according to S&P Global Market Intelligence. The rally added to significant gains for shareholders of the retailer, with the stock up over 80% so far in 2019.

Image source: Getty Images.

So what

November’s boost was powered by a solid earnings report from the company that came just before the start of the core holiday shopping period. Target said early in the month that sales growth remained near a decade-high thanks to booming e-commerce demand, especially for ultra-fast fulfillment options like next-day and same-day delivery. These successes are also helping lift profitability, since shoppers are eager to pay up for instant gratification.

Now what

Coming as it did just ahead of the holiday shopping crush, this report raised investor expectations around Target’s sales growth in the competitive period ahead. They’ll have to wait for post-holiday sales updates for confirmation that this positive momentum carried through into December. Yet there’s more clarity around the chain’s improving earnings power and the growing value of its network of physical stores. Those wins put the retailer in a good position to deliver increasing returns in 2019 and 2020 even as its elevated capital spending program continues.

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Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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