Target Soars On Earnings

March 01, 2022

Target (TGT) announced fourth-quarter profit gains of nearly 12%, and 9% overall sales growth in 2021, resulting in a 12.5% stock price jump during early trading on Tuesday. 

These numbers are just a piece of the impressive résumé put together in 2021 by the retail giant. Target generated $106 billion in revenue last year, an increase of 35% from 2019. 

A total of 281 ETFs hold TGT, representing 43.6 million shares. The fund with the greatest TGT exposure is the VanEck Retail ETF (RTH), which has an allocation of 4.09%. In second and third place sit the ETC 6 Meridian Quality Growth ETF (SXQG) and the iShares Evolved U.S. Discretionary Spending ETF (IEDI), with an allocation of 3.38% and 3.09%, respectively. 

The SPDR S&P 500 ETF Trust (SPY) holds the most overall shares, at 5.17 million, currently at $982.1 million in value. The iShares Core S&P 500 ETF (IVV) is just below it, with 4.19 million shares, valued at $823 million. A trio of Vanguard funds (VOO, VTI and VIG), all holding at least 2.6 million shares, round out the top five. 

While U.S. large cap and U.S total market ETFs hold the top spots for total value, there is quite a bit of diversity in the funds holding TGT stock. A wide range of ETF strategies also invest heavily in Target. 

The top three ETF strategies holding TGT stock are: 

  • Active Management ETFs: 53 
  • Multifactor ETFs: 48 
  • Vanilla ETFs: 45 

This only makes up about 52% of total ETFs. TGT is also a favorite stock for active and multifactor ETFs, as well as broad-based ETFs. 

There are several reasons to be optimistic about Target's future growth and sustainability, which may help explain such diversity. The Russia-Ukraine conflict has many in the retail sector worried about supply chain delays. However, the 2021 holiday season was ripe with similar problems that Target overcame while many others struggled.  

Target now has 49 fulfillment centers across the U.S.—four of which were opened in 2021. In October 2021, Target also reported that its imports comprised only 3% of container volume in the U.S. Along with solid sales growth, these facts may help explain why, even with political tension in Europe and across the globe mounting, Target stock spiked on Tuesday while many others fell. 

Going forward, Target recently announced a few innovative strategies. It has already begun testing curbside Starbucks delivery. Similarly, some locations are now doing curbside returns, both of which aim to keep the ball rolling with the 45% growth Target saw in same-day services in 2021. 

Overall, 95% of Target's sales were fulfilled by stores in 2021, with more than $30 billion in owned-brand sales, up 18% from 2020. 

With solid fundamentals and 32 new stores opened last year, there are many reasons to be optimistic about ETFs holding TGT stock in 2022 and beyond. 

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