The #1 Big Box Retailer Stock to Buy in 2023

    Leading retailer Walmart (WMT) posted solid sales growth in its last reported quarter and raised its sales outlook for the full year. WMT’s diversified business model, competitive pricing and growing online presence continue to position the company to witness continued growth. Therefore, it may be wise to invest in this top big box retailer in 2023. Read more….

    Walmart Inc. (WMT) is the world’s largest retail company, with sales of more than $600 billion in the past 12 months. It is engaged in both the retail and wholesale trade, marketing and selling a range of goods and services in stores and online at low prices around the world.

    For the third quarter of fiscal 2023, the company’s global revenue grew 8.7% year over year, with strong results in Walmart US, Sam’s Club US, Flipkart and Walmex. An 8.2% increase in Walmart comp sales (excluding fuel) and a 10% increase in Sam’s Club comp sales helped drive growth.

    In addition, the discount chain’s e-commerce sales were up 16% year over year. Also, nascent digital advertising is growing rapidly, with global advertising growth of over 30%, led by Walmart Connect in the US at 40%, and a strong position in Flipkart advertising. The company continued to gain market share in grocery, aided by unit growth in its food business.

    WMT is increasingly attracting new customers from higher-income customers looking for bargains in a challenging macro environment. On a conference call with analysts, John Rainey, Walmart’s CFO, said, “We have continued to gain grocery market share from households of varying incomes, with nearly three-quarters of the market share gains coming from those with annual incomes in excess of $100,000. .”

    In addition, WMT raised its full-year outlook to reflect its impressive performance in the third quarter. The company now expects net sales growth of 5.5%, up from its previous forecast of 4.5%.

    WMT has a record of increasing its dividend for 49 consecutive years. It pays an annual dividend of $2.24 per share, which translates to a yield of 1.59% at the current price. The average dividend yield over four years is 1.68%. The company’s dividend payouts have grown at a 1.9% CAGR over the past three years.

    The stock gained 10.2% last month to close out the last trading session at $140.68.

    Here’s what could affect WMT’s performance in the coming months:

    Positive recent developments

    On January 12, 2023, Walmart Commerce Technologies and Walmart GoLocal announced a partnership with Inc. (CRM) to give retailers access to the tools and services that enable hassle-free local pickup and delivery for customers worldwide.

    On January 5, WMT announced that it had successfully operated 36 drone delivery hubs in seven states, including Arizona, Arkansas, Florida, North Carolina, Texas, Utah and Virginia. In the past year, Walmart has safely completed more than 6,000 customer deliveries in just 30 minutes.

    WMT is uniquely positioned to offer drone delivery at scale, with its 4,700 stores serving 90% of the U.S. population, which could significantly benefit the company.

    Robust finances

    For the fiscal third quarter of 2023, ending October 31, 2022, WMT’s revenue increased 8.8% year over year to $152.81 billion. Net sales Walmart US segment grew 8.5% from a year ago to $104.80 billion, while Sam’s Club segment net sales were $21.40 billion, up 12.6% on an annual basis. Also, Walmart International’s net sales were $25.30 billion, up 7.2% year-over-year.

    As of October 31, 2022, the company’s current assets were $87.68 billion, up 5.7% year-over-year.

    Favorable analyst estimates

    Analysts expect WMT’s revenue for the fiscal first quarter of 2024 (ending April 2023) to reach $145.63 billion, indicating a 3.8% year-over-year increase. The earnings-per-share consensus estimate of $1.39 for the current quarter indicates a 7% year-over-year increase. Also, the company has beaten consensus earnings estimates in each of the next four quarters, which is impressive.

    In addition, the company’s revenue and earnings per share for the current fiscal year (ending January 2024) are expected to grow 3.1% and 7.5% over the prior year to $621.10 billion and $621.10 billion, respectively. $6.54.

    POWR ratings show promise

    WMT’s overall rating of A translates to a strong buy in our POWR ratings system. The POWR ratings are calculated by considering 118 different factors, with each factor optimally weighted.

    Our proprietary rating system also evaluates each stock based on eight different categories. WMT has a sentiment rating of B, in line with favorable analyst estimates. It also has a B rating for stability, consistent with a 24-month beta of 0.69.

    WMT is ranked number 8 out of 39 stocks in the Grocery / Big Box Retailers industry.

    In addition to what I mentioned above, we also provided WMT numbers for value, growth, momentum and quality. Access all WMT ratings here.

    It boils down

    Retail giant WMT continues to capitalize on its growing online presence. With inflation still high, shoppers are looking for bargains and are turning to this major retailer to do their shopping.

    Given WMT’s solid revenue growth, strong growth prospects and attractive dividends, investing in this major big-box retailer in 2023 could make sense.

    How does Walmart Inc. (WMT) turns to its competitors?

    WMT has an overall POWR rating of A. You can also look at these other stocks within the Grocery/Big Box Retailers industry that are rated A (Strong Buy): George Weston Ltd. (WNGRF) and Caseys General Stores, Inc. (CASY), and Ingles Markets Inc. C.I.A (IMKTA).

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    WMT shares fell $0.34 (-0.24%) during premarket trading on Tuesday. Year-to-date, WMT is down -1.02%, versus an increase of 7.04% in the benchmark S&P 500 index over the same period.

    About the author: Mangeet Kaur Bouns

    Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. With its fundamental approach to stock analysis, Mangeet aims to help retail investors understand the underlying factors before making investment decisions.


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