Looking to Scoop Up a Distressed Retail Play? Try Target (NYSE:TGT)

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Target store in Canada
Coquitlam, BC. Canada - July, 8 2013: Target Retail Store facade shoppers comming in and out of the store. First Target store open in BC Canada

Target Store in OregonI’ve always been a firm believer in buy on bad news, sell on good news. Of course, there are limits to this rule. First, you need to look for otherwise solid companies. These are companies that have a strong market share, low debt, and a solid brand. Moreover, they have a clear vision for the future, and they are actually taking steps to make that vision come true. This profile can apply to a wide range of American companies.

One company that is under a lot of pressure, and its stock may suffer due to these pressures is Target (NYSE:TGT). Target is a giant retailing brand in the United States. It has a solid market share, and it doesn’t look like it will be going anywhere anytime soon. Sure, the data breach fiasco that it suffered last year was definitely a black eye to its corporate image. However, underneath all that, there are still solid financial numbers.

Recently, Target has announced that it would be settling a consumer class action lawsuit for $10 million. However, it still faces potential legal liabilities from many different claimants from many different sectors amounting to possibly hundreds of millions of dollars. Such news is never good, and it’s going to work against Target’s price.

Assuming that everything else about this company is solid and its earnings projections would look like they would improve, this may be a good company to buy on bad news. Again, take a look at market leadership, price to earnings ratios as well as annual guidance before you pull the trigger regarding this particular stock.

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