About 2 and half years ago, I got in this great stock at
around $55 when it was hit hard, an outstanding retail giant that faced a
temporary challenge. I’m
talking about Target (TGT) for a moment when Buffett loves to put his money
into work. No surprise. TGT quickly shook off the problems, recovering
pretty soon and becoming stronger. Since then, people became interested in TGT
again and they pushed its price to as high as $85. Along the way, I used
TGT literally as my ATM to draw incomes
regularly. I
even posted such a blog. Eventually when it got too much hyped, my TGT
shared got called away when it was close to $80. I was fine as I knew it was a
bit too expensive at that time and I’m waiting for another opportunity to get
it again. My patience pays off. TGT got crashed again with a haircut off 20% from its peak
recently due to “poor” earnings. When everyone is dumping the shares, I’m happy
to pick them up at a discount. You see, this is an American icon retailer that
has nothing changed fundamentally. Yes, it has significant challenges
especially those from the online retailer giant Amazon but it is still an
enormous cash gusher, a very profitable business. As with any other great
businesses, TGT will adjust and adapt to the new environment when facing
challenges and its long track record of profitability has demonstrated that it
will overcome difficulties! As a value investor, I only want to buy when the
quality stocks are cheap and the thing is they only become cheap when they are facing
temporary problems. This is what is happening to TGT again. With a PE of 12 and
the price being only 0.56 of its sales for such a great business, it is really
cheap to me. It makes me more exciting to see its decades of the record of
paying dividends with a compounding dividend growth rate at double digits. You
don’t see many such companies in the world. I’m happy to buy TGT when it is on
sale!!
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