No retailer is an island. One chain's struggles are often catalysts for busier cash registers at a rival. So let's go over some of the more troubling trends in this space and see if there is a connection.

  • Wal-Mart (NYSE:WMT) shocked investors with an uncharacteristic dip in same-store sales for the month of November.
  • Specialty retailer Gap (NYSE:GPS) continues to see its popularity fade, a point that is hammered home by the fact that comps at the company have fallen a staggering 27.6% since 1999.
  • The Kmart story has been seen as a real-estate play, as Sears (NASDAQ:SHLD) has taken control and cashed out of poorly performing Kmart locations.

If you're aiming for a reason -- or at the very least a welcome beneficiary -- you're on target if you're thinking about Target (NYSE:TGT).

Unlike Wal-Mart, Target didn't stop to catch its breath two months ago. Not only that, it wound up trouncing the world's largest retailer by sporting 4.1% comps in the critical month of December (where Wal-Mart bounced back, only to raise same-unit sales by 1.6% for the period).

Target's also struck gold with its "cheap chic" approach, making Gap all but irrelevant. Consumers know they can get creative fashions at attractive prices, and that has helped Target score perpetual gains at the store level. Since 1999, Gap has only mustered one year of favorable comps.

And as for Kmart's retreat, let's sneak a peek at how Target's expansion has come along over the past few years.

No. of Stores









I know. Any concept can expand. Shareholders usually wind up picking up the tab with dilutive secondary offerings. That isn't the case here. In fact, Target has been aggressively repurchasing its stock to the point where shares outstanding have fallen in each of those years. Target had 917 million fully diluted shares outstanding at the end of fiscal 2003, and it has whittled that number down to just 864 million today.

Bigger company. Bigger earnings. Bigger comps. Fewer shares. So the same Target that earned $1.80 per share in 2003 is now looking to turn a profit of $3.17 a share for its fiscal year that ends later this month.

So getting back to that "cheap chic" motif, how does paying less than 20 times earnings for a brisk all-weather grower that is sensitive to its shareholders sound? Pretty darn good, right?

A tip of the CAPS
Most of you seem to agree with me. Of the 567 investors who have registered an opinion about Target on the Motley Fool CAPS community intelligence database, a whopping 525 feel that the "cheap chic" retailer will beat the market in the future.

Feel the same? Do get your voice heard by clicking here. Don't worry, bears; you can chime in with your dissent there, too.

My point is simply that Target has been a consistent performer. It may very well be the best defensive stock out there at the moment. In the past, investors flocked to pharmaceutical giants or grocery-store chains for stability, yet those stocks buckled under pressure. Target has aced the test. If the economy is improving, folks spend more. If the economy is in decline, conventional department-store customers get thrifty by going to Target.

Why is the company's red logo so big? Well, because no matter where you are -- or where you aim -- you're going to hit the Target.

For more on the big red retailer, check out:

Go back to the beginning to see what other retail stocks are in the running for our CAPS contest.

Wal-Mart and Gap are Inside Value picks. Gap is also a Stock Advisor selection.

Longtime Fool contributor Rick Munarriz is a frequent Target shopper. He does not own shares in any of the companies in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.