Breaking News
0

Top Picks 2019- Walmart WMT

Stock MarketsJan 11, 2019 07:15AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.

Walmart, Inc. (NYSE:WMT) — our top growth pick for 2019 — is the world’s largest retail and wholesale business; while it is best-known for being a low-cost provider of consumer goods, they have also made some critical shifts to capitalize on their position in the marketplace, by utilizing their robust distribution network in the grocery business, Joe Laszewski, senior portfolio manager for Stack Financial Management.

Walmart has been winning at grocery by leveraging their scale and logistical expertise to offer better stock levels and fresher perishables, along with new innovations like online ordering, in-store pickup, and in-home delivery. More importantly, the Company’s firm foundation in grocery helps to drive foot traffic into stores, where customers ultimately purchase higher-margin items.

The company's focus on grocery has helped them not only steal market share from traditional supermarket chains, but it also helps to insulate them from challenges facing many retailers that are losing revenue to online competition.

The company recognizes how e-commerce has changed the marketplace and has also made several strategic acquisitions, the largest of which include Jet.com and Flipkart, to bolster its digital profile. Online sales growth is slated to come in around +40% in fiscal 2018, yet e-commerce is a significant opportunity to grow the top line, as it accounts for less than 5% of total revenue.

With stakes in China and India, Walmart is one of the few retailers positioned to participate in the world’s largest and fastest-growing economies. These initiatives are working, as evidenced by U.S. comp sales growth recently posting the strongest 6-month period in over a decade.

From a valuation standpoint, Walmart trades at a trailing 12-month price/sales ratio of 0.5, which is in-line with long-term historical averages. However, the Walmart of tomorrow will not look like the Walmart of today. The earnings and margin strain in the near-term, caused by dedicated investment in digital and logistics, will be met with accelerated revenue growth to drive share price appreciation.

In today’s market environment, Walmart offers the valuable stability and defensive characteristics that one would expect of a well-established Consumer Staple. However, the company has the scale, capital assets, and logistical expertise that virtually no one else has, giving them an opportunity to grow revenue in today’s highly competitive retail landscape.

With a continued focus on remaining a low-cost leader, while also improving the shopping experience, WMT carries wide appeal to both the baby boomer and millennial consumers. Although Walmart is unlikely to quickly dethrone Amazon (NASDAQ:AMZN), the retailer is finding ways to leverage what they do best and take market share.

(Note: Clients and individuals associated with Stack Financial Management hold positions in, and may from time to time make purchases or sales of, this security.)

Learn more about Stack Financial Management

Top Picks 2019- Walmart WMT
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email