Retail giant Target (NYSE:TGT) has been receiving lots of bad press and there have been talks of boycotts in recent weeks over controversial pride-related clothing items in its stores. In just three months, the stock has tanked 18% and it is trading near its 52-week low of $125.08.
The negative press surrounding the company is bad news for Target, but it's not something that investors should count on lasting for the long term. Consumers typically have short memories and boycotts are often not large enough nor do they last long enough for them to normally have a lasting impact on a company's operations.
In the short term, there could be some challenges but the company is already facing big problems as it is: consumers are moving away from discretionary purchases, and that has led to some underwhelming numbers for Target. Last quarter, the company's sales were up just 0.5%, barely showing any growth at all, with Target noting weakness in discretionary spending. As economic conditions improve, the company should see some better results and stronger earnings numbers.
For now, however, with a recovery still potentially being months away from being a reality, investors are better off avoiding the stock. Target is a promising long-term investment but with more softness still likely ahead in future quarters, I wouldn’t be surprised if the stock were to hit new lows and potentially even dip below $100 before the end of the year. Until that happens, investors are better off keeping the stock on a watchlist rather than investing in it just yet.
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