1. Walmart, Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 95
Walmart (NYSE:WMT) is the largest brick-and-mortar retailer across the globe, operating a chain of discount department stores, grocery stores, and hypermarkets. To put its size into perspective, Walmart (NYSE:WMT) operates around 10,600 stores around the world, with more than 50% of them located outside the United States in 23 other countries. Target (NYSE:TGT), in contrast, has around 2,000 stores, while Kroger has 2,750.
While Walmart’s (NYSE:WMT) sheer size offers it a distinct competitive advantage, there are several other positive reasons behind the stock ranking first on our list of the 7 best department store and discount retailer stocks to buy. It has created a vast retail “omnichannel” with its subscription-based Walmart+ program, which reported a 14.4% year-over-year growth in its membership income. This omnichannel alone was the cause behind a 22% year-over-year growth in Walmart’s (NYSE:WMT) e-commerce revenue in the last quarter.
Walmart (NYSE:WMT) also started appealing to high-income households when inflation started soaring in 2021. Although inflation has started to fall, the company is likely to retain its new customers since it has started adding higher-end brands to its portfolio. For instance, Chaps and Reebok are recent premium additions to the company’s apparel lines, and so are premium wines. Walmart (NYSE:WMT) stores previously looked like warehouses, but the company has now changed this by offering theme-based and seasonal visual presentations.
In addition, the company is expected to remain resilient despite potential economic turbulences, primarily because more than half of its revenue is related to grocery. Regardless of the economic environment, people must eat, after all. It is also poised to withstand challenges, since 25% of its sales come from general merchandise, including office supplies, light bulbs, kids clothing, towels, socks, and the likes.
95 hedge funds hold stakes worth 9.19 billion as of Q2 2024. It sports a consensus Buy rating from analysts, with its median price target presenting an upside of 4.88% from current levels.
Overall, WMT ranks first among the 7 best department store and discount retailer stocks to buy now. While we acknowledge the potential of department store and discount retailer companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than the stocks that are mentioned on our list but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
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.
