There's no denying Amazon (NASDAQ:AMZN) was the big winner of the coronavirus pandemic. Already established as the king of e-commerce, it was the name best prepared for the sudden rush of online shopping. Last year's revenue will likely roll in 35% better than 2019's, once the company's fourth-quarter numbers are posted. A bunch of its new customers will probably remain customers even after the pandemic passes, too.

Amazon's clear success isn't inherently a reason to step into the stock at this time, however. The stock has been suspiciously stagnant since August, even if it managed to gain 76% in calendar 2020, suggesting the market knows the company's got a tough act to follow going forward.

Investors on the hunt for a new consumer-facing pick may want to consider Target (NYSE:TGT). The retailer may not have been quite as ready for the fallout of the COVID-19 contagion as its rivals were. But, quick and smart adaptations made during the throes of the pandemic has created a situation where the discount retailer has more risk-adjusted potential to offer to new investors than its bigger rival presently does.

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Image source: Getty Images.

Why not Amazon?

Don't misread the message. Amazon is still the 800-pound gorilla in the room, accounting for around one-fourth of online shopping in the U.S., according to numbers from Digital Commerce 360. Consumer technology market research outfit eMarketer puts the figure much higher -- around 40%. Both agree on one thing, though: the next-nearest names Walmart (NYSE:WMT) and eBay are a very distant second and third. Target cracked the top-10 U.S. online shopping merchant list for 2019 to rank eighth, but it still only facilitates about 1.2% of the country's e-commerce, according to both market research outfits.

But as was noted, investment opportunities are relative.

Yes, Amazon's estimated top-line growth of 35% last year is impressive. But it's projected to slow to a pace of only 18% this year. Likewise, the per-share earnings of $34.90 analysts are modeling for 2020 may be 52% better than 2019's $23.01, but those same analysts are calling for a per-share profit of $45.41 this year. That's only a 30% improvement. While it's the sort of earnings growth most any other company would envy, with Amazon shares valued at 60 times their forward-looking earnings, the stock is already priced at its typical forward-looking price-to-earnings ratio. There's not necessarily a ton of room for it to tack on more gains, as the sideways movement of the stock since August seems to confirm.

But is Amazon poised to dish out any surprises? There's no argument the company has delivered them before, and CEO Jeff Bezos presumably knows he has to do something special to make sure Amazon's new customers remain customers. That won't be so easy this year, given the legal challenges that have been building of late. The e-commerce giant continues to face antitrust scrutiny at the state and federal level, not to mention overseas. A Democrat-controlled government is only likely to amplify this pressure by imposing restrictions on how the company uses and shares consumer data.

Amazon may find itself on the defensive in a big way for the foreseeable future, resisting efforts to undo the very things that make it such a powerful marketing machine.

Why Target?

But is Target any better positioned to drive the sort of growth that will in turn drive the stock's price upward? In a word, yes.

Admittedly, Target wasn't quite as ready as Walmart was when the coronavirus made its way to the U.S. Although it began offering nationwide curbside pickup of online orders in 2018, fresh and frozen groceries weren't available for pickup until June of last year. By that time, data from Gordon Haskett indicates Walmart had already won more than half the new curbside grocery business that the pandemic created. A study from BrandSpark released in October said that as of then, Walmart was by far the most trusted name in curbside pickup; clearly the world's biggest brick-and-mortar retailer has continued to do the right thing on this front, even if it's just leveraging its physical footprint.

There's a reason Target shares have continued their steady march to record new highs this month -- this smaller retailer is preparing itself for the next (and post-pandemic) era of consumerism.

One such initiative is an alliance with Ulta Beauty (NASDAQ:ULTA) that calls for the eventual establishment of hundreds of Ulta-branded shops inside Target stores. While Target already sells cosmetics and beauty supplies, consumers may respond better to this third-party partnership revealed in November. Another growth-driving initiative that was already under way when COVID-19 took centerstage is Target Circle, the retailer's loyalty program that launched in late 2019. Not only does this program drive repeat business by offering discounts on future purchases, but it provides valuable consumer data on 80 million members who simply didn't exist before. Then of course there's e-commerce. While Target has offered online shopping for years, the pandemic forced it to step up its game in a hurry. And it's done so. Digital sales grew 155% during the quarter ending in October. Yet there's still a massive amount of online sales growth to be gleaned. E-commerce growth only made up about a tenth of Target's same-store sales growth of 9.9% last quarter, suggesting online sales still only make up a tiny fraction of the company's top line. And that's only a sampling of some of the initiatives that have fallen into place in the past few months, many of which -- like remodels, supply chain improvements, and same-day deliveries -- were planned for 2020, before COVID-19 disrupted those plans. Now those plans are under way again.

Simply put, the retailer has only recently found its full stride. Analysts are calling for a 3% slide in revenue this year, accompanied by a similar setback in per-share earnings. If there was any name setting the stage for a 2021 surprise, though, it's arguably Target.

Bottom line

If you already own Amazon, don't panic. It's more than a solid enough company, even if this year could be a relatively rocky one. If you've got some idle cash to place in a retail investment right now, however, Target's second wind makes it the better risk-adjusted pick. That won't necessarily be the case a year from 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.