Target (TGT)

Target currently plans to spin off its real estate holdings into a separate entity, which would then lease the land to Target. This would allow the company to focus more of its energy on improving its retail business and isolate it from the flagging real estate market.

Target's REDcards program has showed solid growth, especially the Target Visa. Even though the economy in general has faced rising delinquincy rates due to the subprime lending crisis, Target's default rate has been low, contributing to Target's strong credit profile. The REDcard program additionally provides a unique incentive to shop at Target stores, which helps create customer loyalty to the Target name.

Target has focused on expanding its internal distribution and production services, as well as its private-label brand names, in order to cut costs. This translates into increased profitability for the company, with the potential for future growth.

The intensity of Target's competition with Wal-Mart Stores (WMT) may be overstated. Although the two retailers do share a large proportion of customers, Target has found a strong niche supplying the needs of the "selective" consumers who demand designer goods at discount prices. This gives Target a strong position from which to grow.