Even whether Bill Ackman is unable to build humongous strategic changes or value-extracting deals for Target (NYSE: TGT), his investment in the retailer has limited downside, according to breakingviews. Although Ackman could potentially “push for a sale of Target’s credit card trade, a reengineering of its real estate portfolio, or increasingly aggressive share buybacks,” none of these seem very likely at present.

Target probably wouldn’t sell its credit card commerce considering its fitting a increasingly and increasingly crucial contibutor to earnings. addition, reengineering the real estate portfolio or increasing the already-aggressive buyback would probably require borrowing. At the present day, borrowing at appealing rates is difficult.

Despite Target’s rise in the final few years, the stock remains cheap. As breakingviews famous, the stock trades for just 14x earnings — the same

price as Wal-Mart (NYSE: WMT) — despite growing much faster than Wal-Mart and possessing much increasingly favorable growth prospects than Wal-Mart.

After soaring nearly 15% when Ackman’s $2 billion investment in the company was rumored and revealed, the stock has come back to soil and retraced all of those gains. At these levels, Target is an appealing investment opportunity. The stock is undervalued vs. its peers and possessing loads of free options, most importantly the potential for Ackman to unlock value.

Target looks like an incredible long-term investment and I’ve been contemplating adding it to my faraway term buy and hold portfolio for the final month.

Original post by Kevin Kelly

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