Target Bull Drops Stock To Buy Shares Of This Retailer Following 'Overreaction' To Earnings

Zinger Key Points
  • "I had to make a choice and it was a painful one to sell Target," Stephanie Link says.
  • She still likes Target stock a lot and believes the company is taking share, but there is another buying opportunity too good to pass up.
Target Bull Drops Stock To Buy Shares Of This Retailer Following 'Overreaction' To Earnings

Hightower Advisors' Stephanie Link believed one discount retailer's stock offered a buying opportunity so great, she was willing to sell one of her favorite names to jump in.

What Happened: Link exited her position in Target Corporation TGT to raise cash to buy shares of Dollar General Corp DG.

"I had to make a choice and it was a painful one to sell Target," Link said Monday on CNBC's "Fast Money Halftime Report."

She told CNBC that she still liked Target stock a lot and believed the company was taking share, but Dollar General presented a buying opportunity that was too good to pass up following its third-quarter report, Link said. 

She highlighted the company's nearly 7% increase in same-store sales, as well as its 11% jump in revenue growth year-over-year. She also noted that revenues were up 35% compared to 2019 levels. 

"I really had so much more conviction in Dollar General and less conviction in Target in terms of the timing of when they're going to see better inventories, better margins," Link said. 

Dollar General fell from around $255 per share to nearly $230 per share following its quarterly results. Link called it an "absolute overreaction."

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TGT, DG Price Action: Target shares are down close to 33% year-to-date, while Dollar General shares are slightly positive for the year.

At time of publication, Target was down 5.62% at $154.93 and Dollar General was up 0.74% at $245.91, according to Benzinga Pro.

Photo: Courtesy of Target.

Posted In: CNBCHightower AdvisorsshoppingStephanie LinkEarningsLong IdeasNewsTop StoriesTrading Ideas