With millions of students heading back to school in just weeks, it’s time to pick up bargain retail stocks, including Target (TGT), we said just weeks ago.
For one, consumers are expected to spend up to $41.5 billion for back to school gear, which should pass the $37.1 billion spent in 2021. Back to school college spending could hit $94 billion, about $20 billion more than last year, according to the National Retail Federation.
"Back-to-class shopping is one of the most important consumer shopping occasions of the year. Our research for 2023 shows American consumers are eager to jump start their back-to-school and college purchases early," NRF President and CEO Matthew Shay said in a press release on the survey. "Retailers have been preparing for months to ensure they are well stocked with essential items that families and students need for the school year."
One of the top retailers that should still benefit is Target (TGT).
Around July-August 2020, the stock exploded from about $120 to $187. Then, starting in June 2021, TGT ran from about $219 to $255. In 2022, around the same time, TGT ran from about $135 to $180. This year, after the stock gapped lower, we expect to see a similar move.
Plus, as we wait for TGT to recover, we can collect its current yield of 3.4%. Even better, the company is slowly showing signs of life again.
One of the biggest indicators that a trade is ripe for the taking is when the big players, the financial institutions, get aboard. These big-money players could be fund managers, who might manage enormous pensions funded with billions of dollars, or banks and brokerage firms. Because of their size, they are almost always easy to spot. Moreover, they have a certain "herd instinct" that causes them to act in concert with one another. This serves to maintain trends and accentuate a move.
Once you begin to understand the impact of these behemoths, you'll have a leg up on your timing. Knowledge is power. Once you understand why markets behave as they do, you'll have the added confidence you need to invest in a more aggressive manner. The stock market and indexes based on the market are all impacted by the activities of the huge, well-endowed interests who buy and sell enormous quantities of stock. As a rule, these institutions are conservative in nature. They don't want to be caught in cash when the market is rising. Nor do they want to be overly committed to stocks when a top approaches. Every fund manager's nightmare is to under-perform the key stock market averages. Accordingly, they become obsessed with following the crowd.
These big players spend a lot of time eating expensive lunches in fashionable restaurants. It is when they return from lunch to their trading screens that the real fun begins. If the averages are starting to run up, the manager doesn't want to be left out of the game. He might buy several million dollars worth of stock to keep a pace with his fellow institutional players. Multiply this by hundreds of funds around the world and you have the makings of the afternoon trend.
Normally I would first mention this upcoming Wednesday’s FOMC Meeting Minutes Announcement or possibly say something about the Earnings Announcements this upcoming week which warrant our attention:
Tuesday, August 15 Before the Open: Home Depot (HD)
Wednesday, August 16 Before the Open: Target (TGT)
Thursday, August 17 Before the Open: Wal-Mart (WMT)
Friday, August 18 Before the Open: John Deere (DE)
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