How WMT Stock can help you weather the current storms
With changes in the market environment, some may be on the hunt for bargains, while fear, uncertainty, and doubt (FUD) are high. But what if you don’t have the risk tolerance for it? Instead of buying high-risk, high-potential names, which might dip further before bouncing back, something more stable might be right for you. A good example of this is walmart (NYSE:WMT) Inventory.
Last month, the discount retail giant released a strong earnings report (see below). There is also a good chance that it will be able to overcome the challenge of high inflation. History shows that consumer staples stocks like this show greater resilience in a recessionary environment. This is a big positive, in light of the growing risk of a recession.
That’s not to say Walmart is on track to grow in value at the rate it did in 2020. At the time, pandemic tailwinds gave this blue chip stock a boost. significant inch. Still, an interesting positive return by the end of 2022 is certainly achievable.
If you’re waiting for today’s storms to pass, before returning to more speculative games, adding this name to your portfolio in the meantime may be a wise move.
The latest with WMT stock
The main indices since the beginning of the year are in the red. Walmart shares, however, are more or less at the same price they were trading at in early 2022. Investors have taken a dive in it due to its safe-haven qualities.
Sentiment for WMT stocks is also bullish, due to the release of strong quarterly results last month. Beating on both revenue and earnings, the forecast also suggests that results for this fiscal year (ending in January 2023) will be in line with analysts’ expectations.
More importantly, the December quarter results indicate that the company will be very good at overcoming the current problem of high inflation. By increasing its gross margins, it was able to pass on additional costs, including costs driven by supply chain headwinds, to consumers.
All of this indicates that Walmart is not content to continue to hold steady. This also indicates that the stock will increase in value over the next twelve months. Again, maybe not like the 20+% price jump it saw in 2020. However, maybe better than the sideways price performance it did in 2021.
Walmart stock and potential returns
Some of you might be happy with the mere prospect of WMT stock holding up, in case the stock market drops even further throughout 2022. Still, there might be a path for it to pass. at a price slightly above the $144.50 per share it is trading for. today.
Why? Growth in this fiscal year could exceed current expectations. Walmart’s recent revenue and earnings testify to this. The same goes for the fact that it is aggressive hiring of tens of thousands of new employeesto expand its secondary advertising, grocery delivery and third-party marketplace businesses.
I’m not saying the company expected to see its sales increased by 3.2%, and its earnings increase by around 4.6%, will achieve double-digit growth in revenue and/or net income this year. Considering its gigantic size and maturity, this is a tall order. However, it could slightly exceed these estimates. The high end of the sell-side estimates predicts it will generate $607.15 billion in sales and around $7 in earnings per share.
This would represent revenue growth of around 6% and earnings growth of more than 8%. Assuming the high quality of this blue chip allows it to maintain its current earnings multiple, this could result in a high single-digit return for WMT stock. Combine that with the dividend (1.54% forward yield) and the total return could be close to 10%. In other words, it’s not a bad vehicle for staying ahead of inflation.
The verdict on WMT shares
It goes without saying that you are not going to “get rich” by owning Walmart stock. For risk-conscious investors, now may be the time to take a position.
The big boost he saw in 2020 might not be repeated. But it tracks rising prices, successfully passing them on to consumers. Add to that his move to higher growth areas, he could end 2022 in the green. Even if the market overall ends the year in the red.
In terms of the longer term horizon, this is a great opportunity for those looking for slow and steady returns. Primarily, thanks to steady earnings growth. Not resting on its laurels, its leaps beyond simple brick-and-mortar retail could see it avoid the stagnation and decline that brought down the retail giants of past generations.
At the same time, it continued to increase its dividend over time. He is a true “dividend aristocrat”, having increased his payouts to shareholders 48 years in a row. Get a “B” grade in my portfolio binderWMT stock is a solid choice, both during boom times and tougher times.
As of the date of publication, neither Louis Navellier nor the member of the InvestorPlace research staff principally responsible for this article holds (directly or indirectly) any position in the securities mentioned in this article.
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