Nike (NYSE:NKE) and Target (NYSE:TGT) are both heading into 2021 in a position of strength. Revenue and earnings are climbing. E-commerce helped both consumer stocks to successfully manage the worst stages of the coronavirus pandemic. And, considering the growth in online shopping, their digital platforms will continue to boost revenue once the health crisis is over.

Nike, the maker of athletic wear and shoes, and retail giant Target are among my favorite companies for those reasons. Both represent solid choices for the long-term investor. So, choosing the best buy isn't an easy task. For some help, let's take a closer look at where each company is right now -- and what may lie ahead.

Clock with Time to Buy written on its hands

Image source: Getty Images.

Nike

Nike faced a huge headwind earlier this year -- the temporary closure of most of its stores. That weighed on the business, with overall sales declining 38% in the quarter ending May 31. Nike used that time to reinforce a strategy it implemented in 2017. And that strategy focuses on its digital connection with customers. Nike used its training club platforms to stay connected with fans when stores were closed. Fans logged on to enjoy classes and tips from experts. And, importantly, they shopped online at Nike. While total sales fell, as mentioned above, digital sales during that period soared 75%.

Fast forward to the quarter ended Nov. 30. More than 90% of Nike's stores were open, and overall revenue rose 9% to $11.2 billion. Greater China, the area first hit by COVID-19, posted a 24% gain in revenue. And Nike brand digital sales climbed 84%. The company reported a 12% gain in net income to $1.3 billion. A few other important points: Inventories reached a healthy level, falling 2%. Cash and equivalents rose by more than $8 billion to $11.8 billion year over year.

The strong connection Nike has built with fans, its digital platform, and the comfort of its clothing and shoes (at a time when people favor casual) should work in its favor well into the future.

Target

The coronavirus outbreak didn't hurt Target's business earlier this year. In fact, it offered a huge boost to its digital platform and jump-started its same-day delivery and pickup options. In the early days of the outbreak, consumers flocked to Target for essentials. As time wore on, consumers returned to buying discretionary items -- and they made those purchases at Target.

In the most recent quarter, Target made gains in store and online. The retailer said same-store sales rose 9.9%. Digital sales surged 155%. And order pickup, drive up, and Shipt -- Target's same-day delivery service -- soared 217%.

A key element is Target's market share gains. The company has progressively increased share across its five main product categories -- beauty and household, food and beverage, home furnishings, apparel and accessories, and hardlines. During the November report, Target said it had gained more than $6 billion in market share since the start of the year.

Another key element is Target's use of its stores. The retailer said its stores fulfilled more than 95% of sales in the most recent quarter. This is significant because it lowers Target's costs. Target said using stores for fulfillment is 90% cheaper per unit than relying on transportation from a warehouse.

The surge in business at the start of the outbreak actually offered revenue a lasting boost, not a temporary lift. That's evident in the progressive market share gains, as well as ongoing increases in store sales and digital sales. And that's a good sign for the days to come.

Will it be Nike or Target?

As you can see, it's hard to find a reason why you shouldn't buy one of these stocks. But one of these companies might represent a slightly better opportunity right now. Let's have a look at earnings per share (EPS) estimates for the next fiscal year and profit margin. EPS estimates are increasing for both companies. But Target's profit margin is rising more steeply than that of Nike.

NKE EPS Estimates for Next Fiscal Year Chart

NKE EPS Estimates for Next Fiscal Year. Data by YCharts.

I think that in the near term, the ongoing coronavirus crisis may weigh more on Nike than on Target. Nike still may face temporary store closures in certain regions. For example, the U.K. just announced the shutdown of non-essential retail stores due to the circulation of a new variant of the coronavirus. And during these times, demand for discretionary items might be lower than demand for the wide range of essentials -- including grocery -- found at Target.

That's why Target makes the best addition to your retail stocks shopping list right now.

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.