Target speculation

[Broken Arrow]

What do you suppose the general population will do with their stimulus checks? Some might save it, but many more will buy stuff right?

Sooo... that may temporarily boost sales figures for retailers right? And that could spike up their share prices on the short term.

When it comes to retailers, 2 main ones come to my mind: Wal-mart and Target. Hard to believe, but I actually guessed correctly once that people would eventually "correct" themselves from the economic downturn, and when they do, they would go to places like Wal-mart to find cheaper deals, thus making Wal-mart a good buy at the time.

Naturally, I also didn't put any money into it.

Now, I'm also guessing that, if given the choice, most consumers would rather go to Target to shop. If only they just have some "extra" money to blow. Besides, Target's current sales level is a bit more sluggish at the moment, which presents a better margin of safety.... But it's still not super cheap.

To spice things up, Target's next quarterly earnings report is next Tuesday, May 20th.

So, theoretically, if I want to get in on the action, I may have to do so Monday, if my assumption that the quarterly earning is going to be positive is correct.

At least, that's what I'm guessing right now.... Yes, I realize it's a risky, short-term speculation. Still, what do you guys think?

[skylog]

i know it is late, but i will take a stab. i think you may be on to something, but i am thinking long term play versus getting in and out. target is down quite a bit from its highs and they committed to a huge repurchase plan that they are in the middle of right now. i think they were also in talks to sell their credit card business last year, but i have not looked into it to see if that is still on track. i agree with your thoughts, but it is a tough call, as people may still be hurting and looking to keep heading to wal mart versus target, but eventually, sales at target will pick up and when they do it very well could be a quick and substantial run up. whether you would be willing to be in for the ride is another story.

all of that said, given the run that wal mart has been on, it may be worth it to use some 'play money' on it and see if you can get a nice pop and then decide if you want to think long term after that. that is what i did with chesapeake and it has been a fair move for me.

let us know.

[Broken Arrow]

Thanks for your thoughts! Yeah, I've already bought in, but I don't mind the feedback still.

I agree that it's a fine long term position on consumer retailers....

But yes, I'm looking at it more as a temporary capture, because I don't expect the effect of the stimulus checks to have a lasting effect. After that, as you say, people are still hurting financially.

Wal-Mart, I think, should have been a 2007 position, for those who are ballsy enough to bet on a consumer spending correction. Right now, it's trading very high so I'm afraid that "opportunity" is already gone.

But anyways, I'm in between now and until the end of the year. Will most certainly update on what happens to it.