The Daily Cent | Business & Investing
Target has been one of the more interesting retail stocks in 2026. After a difficult period for the company, investors are increasingly betting that Target's turnaround is finally beginning to work.
The stock has gained significantly this year, with recent reporting showing shares up roughly 66% in 2026. But what's behind the rally?
Target Is Finally Growing Again
One of the biggest reasons investors are becoming more optimistic is simple: customers are coming back.
Target's second-quarter 2026 sales increased 5.3%, while comparable sales increased 3.8%. Customer traffic also increased 3.6%.
That's important because Target spent much of the previous period struggling to generate consistent sales growth.
The company is now showing improvement across its business rather than relying on one particular category.
Digital Sales Are Growing
Target's online business is also gaining momentum.
Digital comparable sales increased 8.7% in the second quarter, helped by more than 25% growth in same-day delivery.
Target has been investing heavily in making its stores work as fulfillment centers, allowing customers to order online and receive products quickly.
That combination of physical stores and digital convenience could become an important competitive advantage.
Target Is Investing in Its Stores
Target isn't simply waiting for consumers to return.
The company announced plans to invest an additional $2 billion during 2026, including more than $1 billion in additional capital expenditures and another $1 billion in operating investments. The money is being directed toward stores, employees, merchandise, technology and the overall shopping experience.
The strategy is essentially a bet that a better Target experience can bring customers back more frequently.
The Company Is Cutting Prices
Target has also been focused on value.
The retailer says it has lowered prices on more than 10,000 frequently purchased items over the past year.
That's particularly important as consumers remain price-conscious.
Target has to compete with Walmart, Costco, Amazon and other retailers that have built strong reputations around value.
Target's Advertising Business Is Growing
Here's an interesting part of Target's business that doesn't get as much attention: advertising.
Target's Roundel advertising business is part of its growing non-merchandise revenue. Target also generates revenue from Target Circle 360 memberships and its Target Plus marketplace.
In the second quarter, non-merchandise sales increased more than 20%.
That gives Target additional ways to make money beyond simply selling products in its stores.
Investors Also Like the Improved Outlook
Target raised its 2026 expectations following its second-quarter results.
The company now expects full-year sales growth of around 5%, compared with its previous guidance of around 4%. It also raised its adjusted EPS outlook to $9.90–$10.90.
That's the kind of improvement investors want to see from a turnaround story: better sales, better traffic and higher expectations.
But There Is Still a Big Risk
Target's rally doesn't mean the company has completely solved its problems.
One important detail from the latest earnings report is that Target's second-quarter earnings received a significant boost from tariff refunds. The company said those refunds contributed $1.65 to second-quarter EPS. Excluding the tariff refunds, EPS still increased 20% year over year, but the headline number was substantially helped by the one-time benefit.
Investors therefore need to determine whether Target can continue improving without relying on temporary benefits.
And after such a large stock rally, expectations are higher.
The Daily Cent Takeaway
Target's stock is rising because investors are beginning to see evidence that the retailer's turnaround is gaining traction.
Sales are growing. Traffic is improving. Digital sales are increasing. The company is investing in stores and technology, and management has raised its outlook.
But the biggest test is still ahead.
Target needs to prove that 2026 isn't simply a good year—it needs to demonstrate that it has built a sustainable growth engine that can compete with Walmart, Amazon and other major retailers.
For investors, Target is becoming a fascinating turnaround story.
The question now isn't whether Target can recover. It's whether the company can turn this momentum into long-term growth.
Disclaimer: This article is for informational and educational purposes only and should not be considered personalized financial or investment advice. Investors should conduct their own research and consider their financial circumstances before making investment decisions.
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