We recently published a list of 10 Stocks Jim Cramer is Talking About. In this article, we are going to take a look at where Walmart Inc. (NYSE:WMT) stands against other stocks Jim Cramer is talking about.
On a recent episode of Mad Money, Jim Cramer suggests that perhaps we are misjudging the retail sector. He argues that the debate over whether consumers are sick, well, frugal, or stressed might be misguided. According to Cramer, consumer behavior doesn’t shift dramatically overnight; people don’t suddenly change from being sick to well within a single quarter. As we look ahead to the Fed’s discussion at Jackson Hole on Friday, with the market averages rising by 56 points and the S&P 500 increasing by 42%, it’s clear we need to reassess our views on the consumer’s state.
“Maybe we’re looking at retail all wrong. Perhaps this whole discussion about whether the consumer is sick, well, frugal, or stressed is just a big pile of manure. The consumer doesn’t change their behavior overnight; they don’t get sick and then recover within a single quarter. As we consider what the Fed will discuss on Friday at Jackson Hole, with the averages inching up 56 points and the S&P 500 advancing 42%, we need to rethink the great debate about the state of the consumer.”
Jim Cramer points out that understanding consumer behavior is crucial for predicting when the Fed might cut interest rates. He explains that the Fed needs to lower rates before the economy worsens to the point of needing urgent intervention. However, the Fed can’t act if the economy is performing well.
“This debate is central to what the market needs to see for rate cuts. We first need to understand that the Fed has to start cutting interest rates before the economy deteriorates to a point where they need to scramble to fix things. However, they can’t act if the economy is doing fine. The aggregate retail sales data is inconclusive, so we often try to extrapolate from individual retailers. Taken together, these retailers seem to suggest that the consumer is fickle and perhaps tapped out.”
Jim Cramer argues that the current debate about consumer behavior might be misguided. He believes that consumers are not as fickle as some suggest. Instead, they are shopping at stores led by successful retail CEOs like Ron Vachris, Doug McMillon, Ernie Herman, and Brian Cornell.
“Tonight, I’m arguing that the consumer is not fickle at all. People are shopping, and they’re shopping at places where great retail CEOs are making a difference, like Ron Vachris at Costco, Doug McMillon at Walmart, Ernie Herman at TJX, and Brian Cornell at Target. These are the places people are choosing to shop. The consumer isn’t frugal or tight-fisted; they’re simply shopping where they prefer, and these outstanding merchants are drawing them in.”
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A manager standing in a hypermarket, pointing out items available for wholesale.
Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Investors: 95
Jim Cramer discussed Walmart Inc. (NYSE:WMT) under Doug McMillon, noting that while McMillon often avoids detailed comments on quarterly performance, Walmart’s strategy of lowering prices on 7,200 items is getting attention. Cramer emphasized that Walmart Inc. (NYSE:WMT) now offers remarkably low prices, with some items reduced to levels from 2020 or 2019.
“Finally, let’s discuss Walmart under Doug McMillon. McMillon doesn’t like to talk much about the details of the quarter, but one thing is clear: by rolling back prices on 7,200 items, Walmart is making sure people notice. Shoppers go to Walmart and find incredibly low prices, some even rolled back to 2020 or 2019 levels. Walmart, once a drag to shop through, is now dazzling. Before you dismiss it, I urge you to take a look—don’t be a snob. You might be surprised by how great Walmart is.”
Walmart Inc. (NYSE:WMT) is a strong investment due to its vast global presence and strategic strengths. As the world’s largest retailer with over 10,500 stores in 24 countries, Walmart Inc. (NYSE:WMT) uses its size to negotiate favorable deals with suppliers, allowing it to offer low prices while maintaining healthy profit margins. Walmart Inc. (NYSE:WMT)’s extensive distribution network and efficient supply chain further enhance its ability to serve a large customer base effectively. In fiscal year 2023, Walmart Inc. (NYSE:WMT) reported revenue of $611.3 billion, marking a 6.7% increase from the previous year.
This solid financial performance supports its ability to invest in growth, pay dividends, and repurchase shares, making it appealing to investors. Walmart Inc. (NYSE:WMT)’s e-commerce sales grew by 17% in FY 2023, thanks to improvements in its online platforms and services like Walmart+. Walmart Inc. (NYSE:WMT)’s business model also proves resilient during economic downturns, such as the COVID-19 pandemic, when strong sales of essentials drove growth.
Walmart Inc. (NYSE:WMT)’s strategic moves into healthcare, financial services, and new technologies enhance its long-term growth potential. Additionally, its commitment to sustainability and social responsibility, with goals for zero emissions and waste reduction by 2040, boosts its brand appeal to socially conscious investors.
Overall WMT ranks 2nd on our list of stocks Jim Cramer is talking about. While we acknowledge the potential of WMT as an investment, our conviction lies in the belief that under the radar 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 WMT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
