Target's Stock Is on a Tear in 2026. Can It Still Go Higher? |

Target (TGT +0.83%) stock looked like it was in deep trouble as recently as last year. Its growth was unimpressive, investors were concerned about the company’s future, and the stock seemingly couldn’t get any traction, trading at a massive discount to its larger rival, Walmart (WMT +0.36%).

This year, however, things have turned around significantly for Target, whose shares are up more than 60%. It’s outperforming not just Walmart, but the S&P 500 and many other top growth stocks. It’s been a red-hot buy, as investor sentiment has clearly improved. Plus, with the stock coming into the year trading at a drastically reduced valuation, investors may have seen the compelling value the investment offered.

The big question, however, is whether Target’s stock can still rise higher, or is it approaching a peak? Let’s find out.

The company’s growth rate has been improving

A big reason investors were hesitant to invest in Target in the past was due to its tepid growth. There were many quarters of flat or negative growth, and so while the stock was cheap, it may have also been seen as a value trap due to the question marks about its future.

In recent quarters, however, its growth rate has improved a bit. That may be due to a combination of Target going up against weaker prior-year comparable numbers and the changes its new CEO, Michael Fiddelke, who took over in February, has made. The CEO says the results give him confidence that the company’s new strategy is working. It certainly helps that Fiddelke says that “over the past year, we’ve reduced prices on more than 10,000 frequently purchased items.”

TGT Revenue (Quarterly YoY Growth) data by YCharts

Target may be winning over more customers due to lower prices, and the good news is that the moves don’t appear to be hurting the bottom line. While tariff refunds have boosted the company’s earnings, Target says that even when excluding them, its adjusted earnings per share were up 20% in its most recent quarter (which ended on Aug. 1).

Why Target’s stock can still rise higher

Despite its massive gains this year, Target’s stock isn’t all that expensive. It’s trading at 15 times its expected future earnings, and its price-to-sales multiple is just under 0.70. The retail stock remains a bargain compared to Walmart, which trades at a forward earnings multiple of around 37.

With Target being more competitive in its offerings and price, the gap between these two stocks, with respect to earnings multiples, may end up shrinking even more in the future. Walmart looks wildly overpriced while Target still looks discounted, which is why I still think the latter is the better buy right now.