Target (NYSE:TGT) reported second quarter results that handily beat estimates and has thrown off the bumpy trend that some retail stocks created last week. The company has an excellent first half of the year in the books, and allowed the retailer to raise it full year guidance. Comparable store sales increased by 3.4% in the second quarter. The manner of those sales is even more encouraging, as Target succeeded in bringing more consumers into their stores. Traffic increased by 2.4%. The company noted that one day fulfillment services like "Order and pick up" were a strong part of the business. Walmart (NYSE:WMT) has a similar initiative, and I think it's very much the way of the future for brick and mortar. If you can do your shopping online, and then go pick it up, it's going to bring to the store, and increase the chance of you running in; hence the traffic growth.

What I really like about Target is how they're balancing growth in brick and mortar, as well as creating an ever progressing online presence. Like many retailers, Target has been forced to innovate and adapt to a shift in the retail industry and focused on keeping market share away from Amazon (NASDAQ:AMZN) by driving its online presence. At present it would seem that Target is adapting well to that shift. Second quarter digital sales increased by 34% on a comparable basis. To produce this type of online growth, while also driving store sales, indicates that management understands the market and is executing well.

Target's operating income increased a whopping 16.9% in the quarter to $1.32 billion. This translated to net earnings of $938 million. That represents a 17.4% increase year over year. Target's share count has been decreasing, leading to earnings on a per share basis to increase 22% to $1.82 per diluted share.

Target's Lino Lakes, MN store. Image source: Target

Target's Lino Lakes, MN store. Image source: Target

Bucking the trend

There are two companies that I've seen successfully buck the trend when it comes to the anxiety in retail; Walmart and Target. To me, Walmart is one of the best barometers of consumer sentiment. Walmart beat expectations last week, and delivered same-store sales growth of 2.8%, while growing online sales by 37%. From a sales perspective, Target outpaced Walmart's growth rate. That says something.

Target is making a strong case for itself. From the online growth, to the same store sales trends, to the introduction of their own brand labels, Target is setting itself up for the future in a balanced approach that appeals to different types of consumers. The balance sheet is rock solid, and the strong first half of the year caused Target to raise its full year guidance. For the full year, Target is forecasting GAAP earnings of $5.90 to $6.20. On the conservative end, that's a 2.6% increase from previous guidance. $5.90 per diluted share would also mark a 7.1% increase over last year's full year earnings of $5.55 per share.

Time to buy?

Within retail, I think it wise to stick to the larger, low price names. Up 19% this morning, the stock is trading at roughly 17.3x the low end of forward full year guidance. That's a little pricier than some retail names, but by no means expensive when you consider the growth that Target is putting together. So is it time to buy?

If we see some more market volatility (as I'm sure we will) over the next year, Target might present some cheaper buy-in points. Considering Target's demonstrated ability to successfully drive sales through e-commerce, while also succeeding in driving store traffic, I rate Target a buy. It simply might be wise to wait for a better entry point, rather than chasing the stock at all time highs. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.