There aren’t many publicly traded companies that have seen their share prices decline over the past five years. Especially when it comes to large cap stocks, which Wall Street tends to favor due to their strong balance sheets that protect them during economic downturns.

However, that has not prevented coffee emporium Starbucks (NSDQ: SBUX) from losing ground since November 2020. SBUX opened near $85 this week, about 13 percent below its closing share price on the same date five years ago.

Even if you add back all the dividends Starbucks has paid out to its common stock shareholders over that span, its total return is still slightly negative. Over that same period, the SPDR S&P 500 ETF (NYSE: SPY) has delivered a total return of 85 percent.

As poorly as SBUX has performed over the past five years, big box retailer Target (NYSE: TGT) has fared even worse. It has lost 37 percent over that span, and that’s including dividends.

Victims of Success

It was not that long ago that Starbucks and Target were ranked among the best managed companies in the world. Starbucks revolutionized the retail coffee industry, while Target was lauded for its imaginative approach to mass market merchandising.

Perhaps they were too successful for their own good. As the old saying goes, imitation is the sincerest form of flattery. That’s why privately owned Inspire Brands acquired Dunkin Donuts five years ago at a cost of $11.3 billion.

It is also why Walmart (NYSE: WMT) has spent $9 billion over the past couple of years to overhaul its stores. The company will remodel another 650 stores this year now that it knows it has a winning formula.

Neither Starbucks nor Target have that much money laying around to make similar improvements. Sales are down, operating margins are narrowing, and their shareholders are demanding immediate results.

Peppermint and Pralines

This week, Starbucks and Target announced they are joining forces to boost sales. To that end, they have concocted a holiday beverage that will only be available at Starbucks cafes located inside a Target store.

Executives at both companies are hoping that a $6 cup of frozen peppermint hot chocolate is exactly what you are craving while out shopping for gifts. If not, you can go to a Starbucks location starting December 2 for a chestnut praline latte or eggnog latte, also new additions to its menu for the holiday season.

As excited as each company claims to be about these developments, investors were unimpressed. Both stocks lost ground on Monday when that news was announced. As far as Wall Street is concerned, it will take a lot more than peppermint and pralines to fix what’s wrong with either company.

When Starbucks released its fiscal 2025 Q4 and full year results three weeks ago, the magnitude of its challenge became clear. Over the past twelve months, its comparable store sales were flat while its operating income declined by 75 percent.

Bottom Fishing

Yesterday, Target released its fiscal 2026 Q3 results that included a 1.5 percent decline in net sales on a year-over-year basis. The company also reduced its guidance for full-year earnings and suggested that holiday sales this year will be adversely impacted by rising prices and the week jobs market.

In short, just about all the bad news that Wall Street was expecting from Target was confirmed. At this point, things can’t get much worse for the company.

That is why I think this may be an opportune time to own Target. At its current share price near $87, Target is valued at 11 times forward earnings compared to a multiple of 34 for Walmart (the S&P 500 Index is trading around 22 times forward earnings).

That may be why private equity firm TRC Capital made a “mini-tender” offer to purchase up to 1.5 million shares of Target two months ago at $89 per share. If successful, TRC Capital will own roughly one-third of one percent of Target Corp.

Of course, just because a stock is cheap does not mean it is a buy. However, it does mean that any good news from Target could quickly propel its share price higher, but it’s going to take a lot more than frozen peppermint hot chocolate to do that.