4 Reasons To Invest In Target Stock While It’s Down (And 3 Reasons It’s Not Worth the Risk)
Written by
John Csiszar
Edited by
Amber Barkley
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Target is one of the most well-known brands in retail, ranking as the No. 7 largest company in its industry in 2024, according to the National Retail Federation. However, its stock has taken a mighty tumble in recent months, dropping 41.11% over the past year and more than 22% on a YTD basis in 2025.
After this type of dramatic move over a relatively short period of time, investors have to ask themselves: Is this an opportunity to pick up Target shares on the cheap, or is there a continuing reason to stay away from the stock?
Here are the arguments both for and against an investment in Target at the present time.
Next, check out the stocks that are doing well in the wake of recent tariff announcements.
Reason To Invest: Extremely Oversold
Traders often use technical analysis to determine when a stock is “oversold,” or trading below its expected value. Typically, market participants use relative strength to determine when a stock is oversold, with a relative strength reading of 30 — on a scale of 1 to 100 — indicating an oversold condition.
For most of March, Target traded with a relative strength right around the 30 mark, marking it as oversold. Some market pundits have touted Target as one of the top-10 most oversold stocks in the market, indicating that at least a bounce should be expected at some point.
Reason To Invest: Recession-Resistant
Although the general market tends to tumble when the economy is in a recession, some stocks hold up better than others. These so-called “defensive companies” sell items that people need, regardless of the condition of the economy. This means their stocks tend to do better on a relative basis, because their business doesn’t drop off as much during a recession.
Target fits into the category of companies because people tend to continue buying what Target is selling even when times are tight. From toilet paper to toothpaste to food, people need to shop at places like Target, even if they’re trying to cut back on their overall spending. This helps the stock hold up in a recessionary environment.
Reason To Invest: High Yield
Target has always been on the radar of income-oriented investors, with a five-year average yield of 2.5% according to full:ratio. But lately, Target’s yield has jumped to a whopping 4.32%, meaning you could earn $432 in income per year on a $10,000 investment.
The high yield also helps provide a floor to the stock, because if it gets any higher, more investors are likely going to be attracted to the big payout.
Reason To Invest: Low P/E
According to full:ratio, Target’s average price-earnings ratio over the past 10 years has been 16.45, and its lowest was 11.31. Currently, it sits at just 11.78, making it a tremendous value both in an absolute sense and when compared with its historical average.
A bounce back even to its historical average P/E could result in a 39% stock pop.
Reason To Avoid: DEI Issues May Persist
One of the reasons Target stock has fallen in 2025 is that it agreed to rescind its diversity, equity and inclusion efforts in line with President Donald Trump’s executive orders targeting DEI at public and private companies.
This has triggered calls for a 40-day boycott of the company, shareholder lawsuits and other adverse actions affecting the company’s foot traffic. The negative publicity surrounding these actions may continue for some time.
Reason To Avoid: Consumer Spending Is Falling
In early March, Target said it expected a meaningful decline in first-quarter profits due to “ongoing consumer uncertainty” and weaker sales in February. As earnings are the primary driver of stock prices, if sales remain soft for Target, it will continue to put pressure on the stock.
Reason To Avoid: Tariff Uncertainty
Tariffs have brought uncertainty and volatility to the market as a whole, and this applies to Target, as well. Rising costs from suppliers could force Target into raising prices for its retail customers, damaging its reputation for being a low-cost competitor.
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