What happened today to make the price of Target (TGT) shares go up 10%? Good news and great earnings. I always appreciate good news and what that sometimes does to the price of a company’s stock. But, there is always a “but.”
But Take Profits Willingly
You don’t have to hold onto shares indefinitely. Target is a great consumer discretionary company, and they have all of the elements that I want to see in an investment. Prior to this morning, there were 600 shares of Target in my IRA. Now there are 500. There is a reason. Actually, there are at least five reasons…
- To grab a 10% gain. The yield is a decent 1.99%, but 10% is five years of 1.99%.
- The stock went ex-dividend on August 18, 2020. I still get the $68 dividends on the 100 shares I sold. I will continue to get dividends on the 500 remaining shares.
- The current euphoria may not last. If the price drops dramatically, I may buy more shares.
- Profits are only profits if you sell. There are reasons to lighten up to lock in profits for other investment opportunities.
- Target may not grow at the same rate in the future. The current P/E is a rich 26.60. That isn’t bad if growth continues, and it is certainly better than TJX. The key word is always “if.”
I still own 500 shares of Target and view it as a long-term holding.