This morning we discussed the price action in retail and consumer discretionary and what appears to be an ever growing list of meaningful earnings disappointment for the holiday season (MorningWord 1/16/14: Shooting First & Never Asking the Right Questions). While it appears that investors have been caught off sides on more than a few names that had stellar performance in 2013 (BBY, BBBY & GME to name a few) there are other stocks, like TGT that had shown massive relative under-performance, which continues into this year.
TGT has had 2 consecutive earnings miss, but the icing on the cake for the latest leg of poor performance has been the data breach over the holiday season potentially affecting millions of consumers.
To get a sense for just how poorly TGT acts relative to its retail peers, here is TGT’s two year performance over the XRT, the retail etf of which it is a component:
TGT and the XRT traded in lock step for most of 2012, until the divergence in August, soon after the stock had made new all time highs. I would also add that this is a fairly disturbing trend to see stocks crashing from all time highs. Some other recent examples in retail are BBBY (now down 18% from the all time highs made just this month), COST down about 9% from the all time highs made in November and WFM down 20% from the all time high made in October.
And finally, back to TGT, the four year chart below shows just how important the imminent support level of $60 is on a long term basis. With TGT down about 18% from the all time highs this summer, and sentiment resembling that of BP after the Gulf spill I cant imagine that pressing the short at these levels will be that profitable of a strategy, but the stock could be nearing an inflection point one way or the other.