Walmart Inc (WMT)

Allan Tong’s Discover Picks The bearish case includes WMT stock’s high PE now of 44x, popping from 27x just six months ago and double the level right before Covid hit in January 2020. Of course, there remains the bogyeman of labour and product inflation eroding margins. Walmart’s saving grace is its powerful branding and the ubiquity of its 11,400 stores spanning 26 countries. Walmarts across this continent remain the go-to for its million consumers whom, I wager, will rely on Walmart more in 2023. The street agrees with 21 buys and five holds at a price target of $162.56 or 14% higher. Read 3 Recently Upgraded Stocks to Buy for our full analysis.

Fairly expensive for its margins. Does well during economic distress. On flipside, margin pressure comes from rising labour costs. Better places to be. He's leery on consumer stocks, both discretionary and staples.

One of the best performers in the Dow Q3, up nearly 7%. Surprising. In late July, it could its full-year forecast for the second time. They lowered forecast in order for their August report to report. People buy this as a trade-down play going into a recession. Repeated missteps by management means he won't recommend it.

He just sold his Walmart. The news earlier this week cut guidance for full-year 2023. There's a shift on consumer sentiment. It trades at a forward 22x which is a premium to the market. That's why he sold. WM will figure things out but will take a quarter or two.

Allan Tong’s Discover Picks Walmart stocks and big retail are out of favour on Wall Street. Supply chain delays, hot inflation, higher wages and now product markdowns are plaguing Walmart and its peers. Further, WM’s last report noted a shift in consumer spending from household stuff to experiences. The company lowered EPS guidance as overall revenues in Q1 fell $5 billion from divesting businesses in the U.K., Japan and Argentina, further weighed by another $0.4 million of unfavourable forex. Meanwhile, international net sales slid 13% to $23.8 billion while net sales declined $5 billion. Adjusted EPS in Q1 reached $1.30, down 23.1% from a year ago. Management forecasted another 1% decline in EPS before flattening. That said, the company beat in Q1, but missed in Q2 which caused shares to slide from $148 to below $120. Read 3 gems from the Collision technology conference for our full analysis.

They reported a few weeks ago and noted a shift in spending from household goods into travel/social. WMT will have to discount some of these goods. The poorer consumer is feeling the impact from higher food and energy prices. Retail stocks have pulled back recently. She's not inclined to buy WMT and prefers Dollar Tree which enjoys more consumer demand.

Excellent example of consumer discretionary that guided down. Not a perfect buy right here, right now. You can take a half position here. Model price of $111.52, which is -9.6% from here. However, they took write-offs on the balance sheet. Wait for support at $106.40, and buy there. He's taking the giants of consumer discretionary and buying when the Fed turns. Yield is 1.78%. (Analysts’ price target is $155.05)

Walmart didn't follow what the consumer was doing--buying more experiences. So, Walmart is left with a lot of inventory. Walmart missed the signal.

They have built up too much inventory. Data shows that consumers are spending more experiences and less on things. This stock will suffer for a little longer.

Was overpriced for a long time, then stagnant, but now reasonable with improving earnings with a forward 22x PE. Walmart is well-positioned. Sam's Club helps.