Why Jim Cramer Says Target (TGT) Stock Is Valued 'Absurdly'

NEW YORK (TheStreet) -- Shares of Target Corp  (TGT) were up 0.92% to $78.64 on heavy volume in midday trading Wednesday, after the big box retailer reported first quarter earnings and revenue that beat analysts' expectations earlier today.

TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio says, "Target is valued absurdly. It should be much higher. Take a look at Macy's (M). It reported subpar results and it's now above where it was when it reported them."

"Target, which did phenomenally in apparel and is doing an aggressive buyback is crushing it. Macy's rallied back a couple of weeks. I think Target will do the same and as we told people in ActionAlertsPlus.com we wish we could buy more, and it is a gigantic position," Cramer added.

In the first quarter, the retailer earned $1.10 per share, up from 70 cents a share a year ago. Target posted revenue of $17.12 billion for the quarter.

Analysts expected Target to post earnings of $1.03 per share on $17.08 billion in revenue, according to analysts surveyed by Thomson Reuters.

For the second quarter, Target expects earnings of between $1.04 to $1.14 per share.

The company also raised its full year earnings guidance to $4.50 to $4.65 per share, from its previous forecast of $4.45 to $4.65 per share.

About 6.5 million shares have exchanged hands as of 12:09 p.m. ET today, compared to its average trading volume of about 4.33 million shares a day.

Minneapolis, M.N.-based Target is a retailer that provides differentiated merchandise at discounted prices.

Insight from TheStreet's Research Team:

Target is a core holding of Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Here's a snippet of what Jim Cramer, Portfolio Manager and Jack Mohr, Director of Research - Action Alerts PLUS wrote about the stock:

We were particularly impressed with the company's e- commerce prowess, with digital sales growing nearly 40% and contributing 0.8 percentage points to comparable sales growth. Separately, comparable sales in the all- important signature categories (Style, Baby, Kids and Wellness) grew more than double the company average.

- Jim Cramer and Jack Mohr, ' Target 1Q Results Beat Consensus' originally published 5/20/2015 on ActionAlertsPLUS.com.

Want more information like this from Jim Cramer and Jack Mohr BEFORE your stock moves? Learn more about ActionAlertsPLUS.com now.

Separately, TheStreet Ratings team rates TARGET CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate TARGET CORP (TGT) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, revenue growth, good cash flow from operations and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income."

You can view the full analysis from the report here: TGT Ratings Report

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