1. Walmart Inc. (NYSE:WMT)
Average Upside Potential: 26.73%
Number of Hedge Fund Holders: 116
Walmart Inc. (NYSE:WMT) is a leading multinational retail corporation operating a chain of hypermarkets, discount department stores, and grocery stores across the US and in 23 other countries. The company offers a broad assortment of merchandise and services at everyday low prices, encompassing categories such as apparel, housewares, electronics, and groceries. WMT operates through various formats, including supercenters, discount stores, neighborhood markets, and e-commerce platforms, serving approximately 270 million customers weekly. WMT often attracts more budget-conscious consumers during economic downturns, which makes it one of the best cyclical stocks to consider ahead of potential recessions. The giant retailer also ranked 3rd on our recent list of 10 Best Low Risk Stocks To Buy in 2025.
Walmart Inc. (NYSE:WMT) posted strong fourth quarter results, with sales increasing by 5.2% and adjusted operating income rising by 9.4% on a constant currency basis. The company continued to gain market share across various countries and income groups, driven by higher transaction volumes and unit sales. E-commerce performance also improved significantly, with online sales making up 18% of total revenue – an 1,100 basis point increase since fiscal 2020. WMT’s advertising business expanded by 27% to reach about $4.4 billion, while US Marketplace revenue rose 37%, with nearly 45% of orders fulfilled through Walmart Fulfillment Services. Membership income also saw strong growth, increasing 21% to approximately $3.8 billion.
Walmart Inc. (NYSE:WMT) improved its return on investment by 50 basis points, reaching 15.5%, a level not seen since 2016. Reflecting its solid financial performance, WMT announced a 13% dividend hike, marking the largest increase in more than ten years. Looking ahead to fiscal 2026, management projects consolidated net sales growth of around 3% to 4%, with operating income expected to grow even faster at 3.5% to 5.5%. Consumer demand for faster delivery has driven over 30% of orders to include paid convenience fees. Meanwhile, the company’s digital transformation continues to gain momentum, with US e-commerce losses improving by 80% YoY. Management also reinforced the company’s commitment to value, introducing more than 22,000 product rollbacks in its US stores over the past year.
Overall, WMT ranks first on our list of the 11 best counter cyclical stocks to buy according to analysts. While we acknowledge the potential of WMT as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than WMT but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks To Buy Now According to Billionaires.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
