Barron’s headline from last weekend: Investors Accepted a Walmart Miss. But Target Triggered a Retail Rethink.
By Jack HoughFollow
Updated May 20, 2022 7:16 pm ET / Original May 20, 2022 6:15 pm ET
The major difference in what $TGT sells vs. $WMT:
Compared with Walmart, Target carries a bigger mix of discretionary items—things people want but don’t need. Those tend to have larger profit margins than basics, but they’re the first things shoppers cut back on when money is tight. Target saw particular weakness in televisions and furniture. An optimist might say that shoppers are pulling back on goods purchases to spend elsewhere on experiences. We’ll se
Meanwhile, Goldman posts a few ideas as bargains now. I hope to find more to read on $ORCL and $VRTX:
I view U.S. stocks as a decent deal for 10-year holders, but the coming year’s return is anyone’s guess. Goldman has a tip for investors who expect more gloom from here: seek out stocks that are already priced for a bear market. To find some, the firm started with companies with strong balance sheets, and then lopped 20% off their 2023 earnings estimates. Goldman then screened for price/earnings ratios—based on those reduced estimates—that are below their lows from either the 2020 bear market, the 2009 one, or both.
The companies that turned up included Chevron (CVX), Electronic Arts (EA), Qualcomm (QCOM), T. Rowe Price (TROW), Tyson Foods (TSN), and Vertex Pharmaceuticals (VRTX).