Is Target A ‘Buy’ As It Conquers Canada?

Will our neighbors to the north be as enthusiastic about Target as their American cousins?

That’s $1.84 billion dollar question after Target announced plans to expand into Canada by taking over leases for up to 220 Zellers stores owned by storied domestic retailer Hudson's Bay Co.

In its first foray outside its U.S. home market, Target said it would pay Zellers $1.84 billion for the leases and would run the stores under the Zellers brand for "a period of time."

The company has more than 1,700 stores in 49 states and has been looking for areas to expand. Chief Executive Gregg Steinhafel told Reuters last May that Canada was a "natural" place for the retailer to expand and 60 percent of Canadians were familiar with the Target brand and its red-and-white bull's-eye logo.

Target said it expects to open up to 150 Target stores in Canada in 2013 and 2014 and expects financial returns on these stores to be in line with returns on new U.S. Target stores. It forecast a dilution in earnings ahead of the store openings, followed by accretion in the first year of operations

What’s the trade?

A few days back, Goldman upgraded Target and downgraded Walmart , reminds Guy Adami. I too like Target stock, he says. I’d dip my toe.

Hear from Sanford Bernstein analyst Colin Granahan. Watch the video now.

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