While the COVID-19 pandemic negatively affected many companies, big-box retailers with online capabilities were some of the biggest winners. Target (TGT 1.28%) in particular enjoyed stunning growth in 2020, driven by the investments it made to its online business prior to the pandemic.

Total comparable sales grew by 19.3% for Target in 2020. The company's stores managed to grow comps by 7.2% despite the pandemic, while the digital business saw sales soar by 145%. Target offers standard online shopping as well as various same-day pickup and delivery services. In the fourth quarter, sales from those same-day services more than tripled, and the company's curbside pick-up option grew by more than 500%.

A shopping cart in a store.

Image source: Getty Images.

Target claims to have gained around $9 billion in market share last year. The company's revenue jumped by $15 billion from 2019, a larger revenue increase than Target managed in the previous 11 years combined. The bottom line rose right along with revenue even as the company faced increased costs related to employee pay, benefits, and safety. Net income was $8.64 per share in 2020, up nearly 36% from 2019.

Target stock has been a big winner thanks to these incredible results. Shares of the retailer are up about 120% over the past year, nearly doubling the return of the S&P 500. There are plenty of high-flying tech stocks that have done better, but investing in Target was certainly a lower-risk option last year.

This can't continue

The big question is: What happens now? Target isn't providing any guidance for 2021 because of continued uncertainty, but it's safe to say that a nearly 20% rise in comparable sales probably isn't going to happen again this year.

The recent economic stimulus bill is likely to help boost retail sales in the near-term, and the overall economy will likely enjoy some strong growth coming out of the pandemic. But where people spend their money will also shift, and the desire to use the various online services that drove much of Target's growth last year may not remain so strong.

Total U.S. restaurant and foodservice sales were down $270 billion from expected levels during the first 12 months of the pandemic, according to the National Restaurant Association. Some of that spending shifted to groceries and other categories that Target sells. There's little reason to believe that restaurant spending won't eventually recover and perhaps even exceed pre-pandemic levels as people look to put the pandemic behind them.

Travel spending was hit even harder than restaurant spending. U.S. travel spending tumbled 42% last year, according to the U.S. Travel Association, and U.S. passenger airline traffic dropped 60%. It's hard to imagine widespread vaccinations not bringing about a boom in demand for travel and a massive shift in consumer spending.

Another thing to consider: How much of the online shopping done during the pandemic was due to boredom? When movie theaters are closed, restaurants are take-out and delivery only, and get-togethers are risky, buying stuff online may have seemed like a reasonable way to pass the time.

It's almost a certainty that Target's sales growth will slow as the pandemic comes to an end, but there's also a chance that Target will start to suffer sales declines as it laps its strong pandemic performance. I don't doubt that some of the shift toward online shopping and grocery delivery and pick-up services is permanent, but probably not all of it.

Target stock now trades for around 24 times earnings. It traded for between 10 times and 15 times earnings for years leading up to the pandemic. If the company's blockbuster 2020 profits fall back to earth after the pandemic is over, a combination of lower earnings and multiple contraction could lead to a severe correction for the stock.

No one knows exactly how this will all shake out. Maybe consumers will continue to flock to Target's digital offerings, and maybe the shift in spending to travel and restaurants won't sting all that much. But with Target stock trading near its all-time high, and with the company facing very difficult comparisons in the coming quarters, there are better options for investors.