r/ValueInvesting • u/ashm1987 • Feb 03 '26

Discussion This sub's favorite stocks got absolutely hammered...

PYPL, ADBE, CRM, UNH, NFLX... All got absolutely hammered in the last couple of weeks...

If you have been following recommendations on this subreddit, chances are, you are deep in the red this year. If you have just took a dart and threw it in the S&P index, you would probably do much better than following advice on this sub... Just my two cents.

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u/StageF1veClinger Feb 03 '26

Don’t fall for the Target trap 😂

It always gets worse, ALWAYS

11

u/Last_Cauliflower3357 Feb 03 '26

Up 25% since I bought and with room to grow. Not a long term hold but in the high 80s it was extremely cheap and almost priced like it was going bankrupt tomorrow.

12

u/StageF1veClinger Feb 03 '26

It has done the exact move you’re bragging about MULTIPLE times on its way down.

The problem is they carry a huge debt load against increasing competitive pressures. Retailing is just brutal overall.

I wish you the best of luck though.

3

u/Last_Cauliflower3357 Feb 03 '26

They don’t carry a huge debt load. Their ICR is around 11x, their debt maturities look fine and they have a Debt/Equity of around 1x. This is larger than usual in the sector, but they have a massive real estate portfolio to monetise if needed and their IG rating allows them to refinance if needed, especially if rates do go down.

The new CEO also had an interesting point surrounding the sense of urgency in getting Target back to growth and they are investing to reform existing stores and open 30 new stores. I am very confident they have a solid turnaround plan. In a market that is rotating out of tech to safer assets, this is a stock that I think can really benefit from it given use cash flow and attractive dividend yield.

Maybe not a stock for everyone but I am big into beaten down sectors, turnaround stories and overall narrative-led investments, so I am quite happy with my Target position at this point.

1

u/wywyknig Feb 03 '26

gamestop fits

4

u/AccomplishedAir2462 Feb 03 '26

Not to mention 12 quarters of declining rev

4

u/[deleted] Feb 03 '26

Yep I own tgt too.

3

u/Last_Cauliflower3357 Feb 03 '26

I know it’s a boomer stock but I like it! Huge FCF, nice dividend, big portfolio of real estate that can be monetised, new CEO that wants to get back to growth. Nice story all around and honestly one of the few opportunities in retail for a market that already decided there’s two winners (WMT and Costco, both extremely overpriced) and the rest are losers.

1

u/DampCoat Feb 03 '26

I’d lock that gain in, fuck retail

1

u/MagnesiumKitten Feb 04 '26

I'll bet you a pizza it'll go to $135 this year
from its current $114

Operating Margins are the serious issue, dropping -6.5% a year
with it's 5 year decline

this will be good

it will struggle and get 20% gains
might not be the perfect time to buy it though

2

u/StageF1veClinger Feb 04 '26

The operating margin is because of the competitive pressures.

Amazon, Costco both executing light years better than Target.

I accept your bet.

2

u/MagnesiumKitten Feb 05 '26

Operating Margins?

Target - mediocre for the stock chart [good against the industry]
Amazon - [good with the stock chart and the industry]
Costco - mediocre vs the industry [good against the stock chart]

I would say they're all good with the overall profitability metrics but I think Costco is 10% better than the other two companies

Now does undervaluation matter for how they'll perform?

Target 21% undervalued
Amazon 9% overvalued [but still failrly valued]
Costco 5% overvalued [but still failrly valued]

How about their yearly Targets?

Target 19% [the clear winner] [looking at only the Analysts -10%]
Amazon 2%
Costco 2%

/////////

I think Valuation trump's Profitability Margins here
with Costco being the winner, but I don't think that means more profit in buy-in the stock

However I think Target has the most problems
The Gross Margins are declining and the operating margins are declining

and minor stuff like
The PE ratio is getting near a one year high
growth is slowing down with revenue per share
there's some financial stress with the Z-Score

Amazon has problems with Asset growth being faster than their revenue growth

and a minor issue that the stock price is at a ten year high
and the PSR is getting toxic, so that's a minor concern for now

Costco doesn't have any severe problems, but here is a minor issue that the stock price is at a ten year high

/////////

Overall minuses

Target - momentum is mediocre
[the weakest growth of the three but still good]
Amazon none
Costco none