Target Stock: Experts Argue Pros and Cons of ‘Buying the Dip’ Amid Trump Tariff Drama
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Lydia Kibet
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Shares of Target (TGT), as well as the stock market in general, tanked on the recent news of President Donald Trump’s reciprocal tariffs on dozens of countries. The new tariffs will heavily penalize goods imported from Asia, where retail giants like Target source their products.
While the administration has since issued a pause on most reciprocal tariffs, the uncertainties surrounding the situation have left investors wondering whether they should buy the dip on Target stock or exercise caution. Here’s what investing experts think about buying the dip.
Why You Should Buy the Dip
There are some reasons experts advise buying the tip in Target’s stock.
Strong Fundamentals
Target is currently under pressure due to tariffs and recession concerns, but its robust business fundamentals remain solid. For one, the retail giant is still generating free cash flow, indicating strong financial health and an investment you can confidently still buy and hold for the long term.
“Target is a company that has a solid foundation and reputation in the U.S. If, as an investor, it fits within your long-term plans and risk profile to make an investment like this, it could make sense to buy the dip,” said R.J. Weiss, founder of The Ways to Wealth.
Target has faced and weathered many economic headwinds, including trade wars, inflation and even recessions. “Tariffs might be a temporary thing, and once the situation is figured out, it could come back strong,” said David Capablanca, founder of The Friendly Bear University. “No one knows how long that could be, though.”
Investors willing to bet on Target’s ability to weather the economic storms could see this dip as a long-term buying opportunity.
Target Looks Dirt Cheap
As of the market close on April 9, Target’s stock is down almost 29% for the year. While this isn’t good in the eyes of investors, it presents an attractive opportunity to those looking to buy the stock for a good value. The stock’s valuation is currently dirt cheap, trading at a forward P/E ratio of 10.76. This is a relatively low multiple compared with what it averaged in the last five years.
And it looks even more undervalued since the S&P 500 is trading at nearly 24 times its forward earnings. At such a modest multiple, Target stock could give long-term investors a more compelling reason to buy.
Dividend King
When the stock market enters into a correction, savvy investors look for high-quality companies with strong fundamentals and a history of rewarding their shareholders. Target is a Dividend King, which means it has increased its dividend for at least 50 years consecutively. Its current quarterly dividend is $1.12 per share.
While Target isn’t a growth stock with the current Trump tariffs, it could be an excellent dividend pick. Investors who buy Dividend Kings during market downturns could see compound returns as stocks rebound and dividends continue to grow.
Why You Should Not Buy the Dip
Alternatively, there may be some reasons to consider holding off on Target’s stock.
Tariffs Uncertainty
Trump’s reciprocal tariffs are one of the major reasons the entire stock market took a nosedive. However, retail stocks like Target are feeling the pinch even more. “The reason why prices are down is the uncertainty. Investors are unsure how to price the current tariff situation in the market and even more unsure of its impact on the future,” Weiss said.
“Target has been particularly affected by tariffs due to its reliance on imported goods from countries like China,” said Joe Schmitz, CEO and founder of Peak Retirement Planning. “Ultimately, this puts pressure on costs, which could lead to price increases across their goods. In return, it could negatively impact revenue and profit margins, ultimately hurting stock prices.”
Consumer Spending Is Changing
One of Target’s major challenges is that most of its sales come from discretionary items compared with its peers. Unlike Walmart, which benefits from strong grocery sales, Target heavily relies on home goods, apparel and electronics, which are items many people tend to cut back on when the economy is tough.
With Trump’s tariffs, prices on items could go up further, making discretionary items less appealing, especially for budget-conscious shoppers.
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