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The COVID-19 pandemic called forth a rising need for food and other essentials. As providers of said services, it stands to say that retailers improved their services and internal management.
By complying with these new requirements, some companies could fulfill their client’s needs properly and become way more profitable within a short amount of time. Of course, finding a company that had managed to reach that point would then become an excellent opportunity for any investor.
Lucky for you, we already have one in mind. To lend you a hand, here’s everything you should know about Target (NYSE: TGT) and how it could bolster your portfolio in the following decades.
A pandemic-induced growth and competitive advantage
Target is certainly not the only national retailer that experienced strong sales growth because of the pandemic, with other examples being Kroger, Walmart and Costco. However, Target was the one that stood out amongst its competitors.
Last year alone, Target’s online efforts saw a boost of 145%, while its physical store sales also saw an increase of 7%. Overall, Target was able to boost its total sales by 20%, equating to a $15 billion total increase.
In response, the management team agreed that at least $9 billion of this amount came upon at the expense of their competitors, stating that Target’s market strength was vital in achieving this new milestone.
In addition, they also confirmed that this current growth had overshadowed that of the last 11 years.
How did Target do it?
The massive surge in sales was an essential factor in kick-starting Target’s remarkable growth.
How did it manage to stand out at all? Well, several of Target’s characteristic services are to be thanked for that.
For starters, Target has several activities related to making sure that all of their deliveries are fulfilled at breakneck speeds, like same-day delivery.
Furthermore, it already offered a wide assortment of non-essentials that, with help of Target’s reliable services, would always manage to get the customer’s attention even during a pandemic.
As the purchase of these types of items never stopped in Target’s case, these high-priced products ended up representing a high revenue by themselves.
What this all means for investors
With this kind of growth, it is no surprise that Target can cover any rising dividends, all required stock buybacks, and any necessary long-term investments for the foreseeable future.
In return, investors are looking at a successful and steady stream of returns.
However, the apparent downside is Target’s current stock price, which is understandably high at this moment in time, doubling since April of 2020.
Nevertheless, we accept those prices, and we still recommend buying Target stocks, even in small amounts. Believe it or not, we highly consider it a premium, high-performing stock.
Their current business model is not only pandemic-effective, as it has the potential for playing out for decades to come even after the pandemic is long gone. Likewise, it has more than enough perspectives for keeping that same kind of growth for that same amount of time, as well as its profit margins.