The turmoil in the markets makes it too easy to justify selling any stock these days. Yet, while an individual investor's panic never helps him or her, it's still a good idea to play devil's advocate with investments.
Consider bargain retailer Target (NYSE: TGT ) . Though the giant retailer has held up relatively well of late, you'll find more than a few of the 2,289 Motley Fool CAPS members who have weighed in on the company offering reasons to be bearish.
Here at the Fool, we like to consider both the good and the bad sides of an investment, so I'm highlighting three of the main bearish arguments on Target. Be sure to read the bullish side as well, and then weigh in with your own comments below or rate Target in CAPS.
1. Still a challenging environment
Even though Target reported improving third-quarter earnings, management quickly pointed out that some Wall Street analysts have a retail outlook that’s too rosy and out-of-touch with reality. The company sees a challenging environment ahead and is cautiously approaching upcoming quarters as consumers keep a tight grip on their wallets and competitors like Wal-Mart Stores (NYSE: WMT ) keep up the discount pressure on in 2010.
2. Weakening sales
While Costco's (Nasdaq: COST ) sales have been showing a step in the right direction, Target, like several other retailers, saw falling sales comparisons in November that couldn’t be saved by strong Thanksgiving weekend sales. It joined department stores like Macy’s (NYSE: M ) and J.C. Penney (NYSE: JCP ) in reporting weaker comps for the month, and expects December to be a similar story, much to the chagrin of those anticipating a recovery.
3. Price wars
With retailers like Wal-Mart and Amazon.com (Nasdaq: AMZN ) putting on a full-court price press to attract customers, some other retailers are feeling the pressure to follow suit and match price cuts at the expense of margins. Best Buy (NYSE: BBY ) recently warned of a weaker fourth-quarter gross margin and some investors are concerned about how the increasingly intense competition will affect Target's numbers.
To see details of what CAPS members are saying now about Target, just click on over to Motley Fool CAPS and have a look -- or add your own thoughts directly to this story in the comments box below.
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