Meet the Value Stock That's Crushing the S&P 500. Here's Why It's Still a Great Buy in September.
Lawrence Rothman, CFA, The Motley Fool
Sat, September 12, 2026 at 1:20 PM GMT+3 3 min read
After a period of underperforming the market, Target (NYSE: TGT) shareholders have been pleased with this year's return. The stock has had a total return, including dividends, of 71% year to date through Sept. 8. That crushed the S&P 500 index's 13% return.
Nonetheless, the share price has a lot more upside potential, given Target's prospects and valuation.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
Target's sales were sluggish before this year. But Michael Fiddelke, promoted to CEO earlier this year, hit the ground running. He implemented plans that included going back to the trendier, differentiated merchandise that originally drew customers to Target. Fiddelke has also invested in store improvements and technology to improve the shopping experience.
Although it's early in the process, this year's results have shown improvement. Target's fiscal second-quarter same-store sales (comps) grew 3.8%. Notably, the increase was almost entirely driven by higher traffic, which accounted for 3.6 percentage points.
It's not discounting merchandise to boost sales, either. Excluding tariff refunds, Target's gross margin expanded about 1 percentage point to 30%. That's due to fewer markdowns and higher sales of advertising and other non-merchandise sales.
Meanwhile, despite the 66% share price gain this year, Target still has an attractive valuation. Target's price-to-earnings (P/E) ratio increased from 12 to 17 during this time. However, that's a much lower P/E multiple than the S&P 500's 26.
Additionally, shareholders can confidently collect dividends, given that Target has raised the payout for 55 straight years. That includes boosting this month's payment by 1.8% to $1.16 per share.
At the new quarterly rate, Target pays a $4.64 annualized dividend. That equates to a 2.9% dividend yield, nearly triple the S&P 500's 1.1% yield.
Should you buy stock in Target right now?
Before you buy stock in Target, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Target wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $409,917!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,341,724!*
Now, it's worth noting Stock Advisor's total average return is 942% — a market-crushing outperformance compared to 211% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of September 12, 2026.
Lawrence Rothman, CFA has positions in Target. The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy.
Meet the Value Stock That's Crushing the S&P 500. Here's Why It's Still a Great Buy in September. was originally published by The Motley Fool
Yorumlar (0)
Giriş yaparak yorum yazabilirsin.
İlk yorumu sen yaz.