Target Corporation — Good Value, Or Falling Knife?

Target Corporation ($TGT) is a dividend growth stock that generally trades at premium valuations.

Recently, however, the company has faced several headwinds, causing shares to plummet. Target stock is at its 52-week low, declining almost 16% over the past 6 months.

Today, we’ll examine whether Target is a good value opportunity. Or, if this is a “falling knife” investment — where shares continue to plummet.

What’s Hurting Target Stock?

Target Corporation is a major American retail chain, similar to Walmart. They sell clothes, computers, food, furniture, toys, and health products.

Unlike Walmart, however, Target stock is suffering.

The company recently released their quarterly earnings report, where they highlighted a rise in retail theft. Target estimates that they will lose over $1 billion this year due to an increase in organized crime and shoplifting rings.

At the same time, Target got into a controversy over LGBT clothes in their children’s section. And this has become the bigger news story.

With some investors fearing Target will become the next Bud Light.

This is what initially interested me in Target stock. And for two reasons.

The first? I’m old enough to remember when financial gurus warned against investing in Starbucks because it was “too political” or a “cultural battleground.”

Most of the Starbucks backlash was extremely online. And the people boycotting never drank Starbucks to begin with.

The second reason?

Last year, I read I’m A Lucky Guy, by former Philip Morris CEO Joseph Cullman. In addition to making cigarettes, Philip Morris was also America’s largest food company. And, they owned the Miller Brewing Company.

In the book, Cullman explains the intricacies of the beer market and how only a tiny percentage of domestic beer-drinkers support the entire industry. Essentially, these are blue-collar guys who want crack a cold one after work while watching TV or visiting with friends.