Stockchase Opinions

Matt Barasch Walmart Inc WMT-N BUY ON WEAKNESS Feb 19, 2004

Getting a little expensive. Would prefer to buy under $50.
$58.380

Stock price when the opinion was issued

department stores
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BUY ON WEAKNESS

North America's largest retailer that is very well run. eCommerce business very strong. Continues to increase revenues and generate cash flow. Stock price now cheap however. Would recommend buying on share price weakness. 

WATCH

They are about to report. See how accretive back-to-school sales were. Is looking for revenues to rise 3-5%. Last August, they already raised their outlook.

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TOP PICK

From our humble beginnings as a small discount retailer in Rogers, Ark., Walmart has opened thousands of stores in the U.S. and expanded internationally. Through innovation, we're creating a seamless experience to let customers shop anytime and anywhere online and in stores. We are creating opportunities and bringing value to customers and communities around the globe. Walmart operates more than 10,500 stores and numerous eCommerce websites in 19 countries. We employ 2.1 million associates around the world — nearly 1.6 million in the U.S. alone. Social media mentions are up 155% in the past 24h.

BUY ON WEAKNESS

She missed this one. They did a very good job pivoting to online sales, and they've added advertising to their platform. They've done well, and the softening economy benefits companies like Walmart. Good long-term. Wait for a pullback. They compete well against Amazon and Target.

SELL

Valuation always high in mid-high 20s PE. Profitability is solid, but margins are thin. Half of business is from grocery, with historically narrow margins of 2-3%. Management's good. Look elsewhere.

BUY

Costco and Walmart offer terrific private label products that appeal to consumer starved for value after products were hiked during Covid. True, private label brands aren't growing much, but they keep all prices--including consumer brands--down. The brands are one reason why  Costco and Walmart keep hitting new highs.

DON'T BUY

Great winner. Higher highs, higher lows. Outpacing S&P since late 2021. Lofty valuation of 38x forward PE, for 10% growth. PEG ratio close to 4x. Grocery component insulates it somewhat from online competition.

BUY

It reported last week. This and Costco are benefiting from the economy of scale. Market share is already strong and will gain further.

BUY

They just reported a beat though slower profit growth, so shares were punished. He does NOT see a crash in sales, and the numbers were in fact good.

COMMENT

By and large, commercial real estate landlords do consider this name to be in the grocery space. It's doing a better and better job of that. But not a pure-play grocery. He thinks of defensive, grocery-anchored shopping centres as neighbourhood, urban, smaller centres -- where you can get a haircut and do other errands that can't be done online.