Is Target Ready to Outperform After Strong December Sales?

With shares trading around $60.16, is Target Corp. (NYSE:TGT) an OUTPERFORM, a WAIT AND SEE, or a STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the stock’s movement3-target

On January 3, Target reported that its “net retail sales for the five weeks ended December 29, 2012 were $10,214 million, an increase of 0.8 percent from $10,138 million for the five weeks ended December 31, 2011. On this same basis, December comparable-store sales were essentially flat.”

Not bad for a holiday season mired in fiscal cliff drama and economic headwinds. Target’s December sales accounted for about 62 percent of its fourth-quarter sales and 15.5 percent of its full-year sales. Total 2012 sales grew 3.3 percent and comparable-store sales grew 2.7 percent compared to 2011.

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Target also reiterated that it expects “fourth quarter 2012 adjusted EPS of $1.64 to $1.74 and GAAP EPS of $1.45 to $1.55. The 19-cent difference between these ranges reflected the expected EPS impact of expenses related to the company’s Canadian market entry.”

The markets reacted to this news by sending shares up 2.28 percent, a particularly welcome boost after the stock managed to shed a few cents off its price on Wednesday, when the S&P closed up 2.54 percent in a fit of post-tax-deal excitement.

It’s worth noting that Target will stop releasing monthly sales data on February 7, leaving just two months of granular sales data. After that, investors will have to rely on the quarterly results for sales data. The absence of this monthly catalyst is likely to change how the stock price moves.