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Quick Look
- Consumer staples have been the third-best performing sector so far in 2026.
- After 12 years at the helm, Doug McMillon has retired, with John Furner taking over as CEO of Walmart in the wake of the company's stock gaining more than 28%.
- Michael Fiddelke takes over as CEO of embattled Target, whose social issues fallout has contributed to the company's stock losing more than 17% over the past year.
After gaining less than 4% in 2025 and finishing second-worst among the S&P 500's 11 sectors, consumer staples stocks are staging a comeback this year.
Just over a month into 2026, the consumer staples sector has posted a gain of nearly 9%, trailing only the energy and materials sectors' gains of nearly 12% and 10%, respectively.
While the rotation out of tech has benefited those defensive sectors, so too have the year-to-date (YTD) performances of two of America's largest retailers.
Target (NYSE: TGT) and Walmart (NASDAQ: WMT) have posted YTD gains of nearly 11% and more than 13%, respectively. And with both corporations now under new leadership, arguments can be made in favor of both as investors hope consumer staples' early success this year continues.
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Walmart Picks a Familiar Face to Succeed McMillon
On the back of a more than 24% gain in 2025, Walmart joined the $1 billion market cap club on Tuesday, Feb. 3—just three days into the tenure of newly appointed president and CEO John Furner.
Furner, who took the reins on Feb. 1, is following in the footsteps of Doug McMillon, who served as Walmart's fifth CEO for 12 years and began with the company as a summer stock associate in his first job as a 17-year-old in 1984.
McMillon notably led Walmart through its digital transformation, making the company's membership-based Walmart+ a leading competitor to Amazon (NASDAQ: AMZN) while maintaining its warehouse segment Sam's Club as a leading competitor of Costco (NASDAQ: COST).
When the company reports its Q4 fiscal year 2026 (FY2026) earnings on Feb. 19, it will reflect the final quarter of McMillon's run as CEO—a legacy that Furner will look to build upon, including 14 earnings and revenue beats in the past 16 quarters.
Furner, who in 1993 also began working for Walmart as an hourly associate, will look to continue his predecessor's track record of EPS growth, which stood at 44.08% and 26.18% the past two years.
Perhaps the biggest challenge facing the new CEO will be maintaining Walmart's unprecedented growth while successfully implementing AI. Until then, investors can look forward to a steadily increasing yield. The Dividend King has now increased its payout for 53 consecutive years, while maintaining a healthy payout ratio of less than 33% to go along with an annualized five-year dividend growth rate of 3.17%.
Target's New CEO Faces an Uphill Battle
Conversely, new Target CEO Michael Fiddelke—who previously served as the company's COO—has a more challenging landscape to navigate after taking over on Feb. 1.
The company's previous CEO, Brian Cornell, stepped down after 14 years of service, the tail end of which was marked by a less-than-desirable financial performance stemming from declining consumer sentiment, a struggling grocery line that has seen shoppers prioritize competitors like Walmart and Costco, and a sustained slump in higher-margin discretionary goods amid ongoing inflation.
The result has been shares losing more than 57% from their five-year high in August 2021, exacerbated by revenue losses in 2023 and 2024 and negative EPS in 2024.
Target has missed earnings expectations in three of the past seven quarters, with revenue missing in five of those quarters.
For patient investors who believe Target's forward price-to-earnings ratio of 12.80 signals better performance ahead, the stock—a Dividend King like Walmart—yields 4.10% versus its peers' 0.74%, along with an annualized five-year dividend growth rate of 11.30%.
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What Analysts Think of Walmart and Target
Given the stock's recent success and consumer staples' inelastic demand, analysts are bullish on WMT, with 32 of the 34 covering the stock assigning it a Buy rating. However, Walmart's average 12-month price target of $123.93 suggests nearly 3% downside.
On the other hand, the majority of the 34 analysts covering Target assign it a Hold rating to go along with an average 12-month price target of $103.21, or more than 7% potential downside.
According to Target's current short interest of 3.79% of the float, Wall Street's bears foresee more downside risk than they do for Walmart, whose current short interest stands at just 0.50%.
However, one notable advantage for Target is that the smart money has piled into the stock, with institutional ownership of nearly 80% resulting in more than $12 billion in inflows over the past 12 months versus just shy of $7 billion in outflows. Walmart's institutional ownership is notably lower at less than 27%, but inflows of more than $52 billion over the past 12 months are more than double the outflows of nearly $24 billion.
Target scores higher than 87% of companies evaluated by MarketBeat, ranking 43rd out of 201 stocks in the retail/wholesale sector, while Walmart ranks 86th out of 201 and scores higher than 72%.
But Walmart's big edge comes via its TradeSmith financial health score, which has seen the company in the Green Zone for more than nine months, compared to Target, which has spent the majority of the past year in the Red Zone.
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