Walmart Is the Best Brick-and-Mortar Retail Stock

Wal-Mart Stores Inc (NYSE: WMT) has served as a beacon of hope for U.S. retail investors in 2017, and early estimates for the critical holiday shopping season suggest the company is positioned to finish the year on a high note.

Brick-and-mortar retail stocks got a big boost on surprisingly strong holiday shopping numbers, and Walmart looks to be the best-positioned of all to thrive in the (AMZN) era.

According to Mastercard SpendingPulse, U.S. holiday shopping revenue increased by 4.9 percent in 2017, its largest uptick in six years. Online sales soared 18.1 percent compared to a year ago.

Struggling brick-and-mortar retail stocks such as Macy’s (M), J.C. Penney Co. (JCP) and Target Corp. (TGT) lagged the market all year, but Walmart has been a top retail performer. While Target stock is down more than 9 percent in 2017, Walmart gained more than 43 percent and nearly kept pace with Amazon’s returns.

MKM Partners analyst Patrick McKeever says Walmart’s momentum carried over to the fourth quarter.

“We called Walmart out as a Black Friday weekend winner in our Nov. 24, report and we believe solid trends have continued into the pre-Christmas week, with less of a lull between the two events than we’ve seen in recent years,” McKeever says. “We think Walmart is continuing to benefit from investments in wages and training that have weighed on profitability but are contributing to cleaner stores, higher in-stock levels, better customer service and a faster check-out process.”

MKM expects Walmart to report 1.8 percent same-store sales growth in the fourth quarter, in the middle of its guidance range of between 1.5 and 2 percent.

Kari Firestone, co-founder and CEO of Aureus Asset Management, says Walmartmanagement acted clearly and definitively in emphasizing its online sales business.


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