I recently laid out a bullish thesis for Target , which is poised for a bullish turnaround after shedding 50% of its market value over the past year. Recently breaking out above a critical resistance level, TGT has begun to show early signs of sector and market outperformance. Coupled with its compelling valuation relative to industry peers, this scenario presents an optimal moment to seek bullish exposure using options. Trade timing The timing for adding bullish exposure to TGT is optimal, as the stock has recently broken out above its $100 resistance, marking the end of a three-month sideways consolidation. This is a classic signal of a bearish-to-bullish turnaround. Additionally, this breakout is coupled with improving relative strength compared to the S & P 500, signaling potential for significant upside toward our upside target of $130. Fundamentals TGT trades at a substantial discount relative to its competitors despite robust profitability metrics. Forward PE ratio: 13.5x vs. industry average 18.1x Expected EPS growth: 9.2% vs. industry average 9.0% Expected revenue growth: 1.2% vs. industry average 5.3% Net margins: 4.0% vs. Industry Average 2.4% Bullish thesis Sector catch-up: After losing approximately half its value over the past year, TGT is now primed for a sector catch-up rally, supported by technical breakout momentum and early signs of relative outperformance. Attractive valuation: With competitors Walmart and Costco trading at significant valuation premiums (38x and 50x forward earnings, respectively), TGT’s forward PE of 13.5x provides considerable valuation upside. Superior margins: TGT’s net margin of 4% exceeds over 75% of its industry peers, highlighting robust operational efficiency and profitability despite the challenging retail environment. Dividends & Cashflow: TGT’s 4.3% dividend yield far exceeds its industry which is supported by its significant free cash flow generation. Options trade Given TGT’s compelling valuation and technical breakout, I am buying the Aug. 15 $100 Call @ $7.23 Debit. Maximum reward: Unlimited upside above the breakeven price. Maximum risk: $723 per contract if TGT is below $100 at expiration. Breakeven point: $107.23 View this Trade with Updated Prices at OptionsPlay . This options strategy leverages Target’s recent breakout, attractive valuation, and leadership to position you for substantial upside potential. With defined risk and unlimited reward above the breakeven price, this trade offers a compelling risk-to-reward scenario for capturing Target’s anticipated sector catch-up rally. DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
