ADS 468x60

Wednesday, March 9, 2011

Target (TGT)

I actually bought this one in the Benjanomics virtual portfolio last week, but didn't get around to writing about it until now. Luckily, Target has held steady and the trade can still be had for a good price.

I have previously written about two other retail stocks, Kohls and Wal Mart. While I am hesitant to own so much retail in one portfolio, I am comfortable owning these and think that they offer good value to any investor's portfolio.

I personally shop at Target quite often. Being in Atlanta, you are either ITP (inside 285) or OTP (outside 285). Since I am ITP and their are more Targets ITP, I go to Target more often. Also, I think the stores are laid out better and aren't as overwhelming as Wal-Mart. And recently, for the first time in four years, Target actually has lower prices than Wal-Mart. Another thing working in Targets favor is that it will be selling the gadget of the year, the iPad 2! Target currently sells at a PE of 12.91 and has a forward PE of 10.99. So here is the buy-write:

Buy 100 TGT at $51.64:                (5,164)
Sell 1 Jan 12 52.5 Call @4.00:          400
Sell 1 Jan 12 52.5 Put @5.50:           550
Total outlay:                                  (4,214)

Total Return: $1,096 on a stock that need to rise by .36 over the next 9 months.

Break Even: $47ish

And to all the people that say "but gas prices are rising and they are going to kill retail!" I say ride the Marta bus.

Disclosure: I may or may not own any of the securities mentioned and am not an investment advisor. Please do your own due diligence before investing in any securities mentioned.


Post a Comment