We recently published a list of Jim Cramer’s Latest Lightning Round: Top 10 Stocks. Since Walmart Inc (NYSE:WMT) ranks 2nd on the list, it deserves a deeper look.
Jim Cramer in a latest program on CNBC said that the market has already priced in the expected positive comments from the Fed Chair Jerome Powell at the Jackson Hole event in Wyoming. Cramer said some bulls might be hoping for an indication of “multiple rate cuts,” but that’s “not gonna happen.”
Cramer talked about the latest 8-day winning streak of the market which he called a “resurrection.” He said that almost “anything” during these days went up. Even the companies with “bad” results went up because investors thought they would improve once the Fed begins to cut interest rates, Cramer said.
“But that was then, this is now. Since the winning streak ended we are starting to get into what I call the buyer’s remorse phase of this move. Stocks have had a nice run based on nothing more than hope are now rolling over hard.”
Jim Cramer also pointed to the possible events in the coming months that could keep the markets depressed:
“Maybe the Fed is already too late and the economy will get real ugly or maybe traders are beginning to fear the possibility of a democratic sweep in November which could lead to higher corporate tax rate, bad for earnings. And a potential witchhunt for price gouging in the aisles of the supermarket and the drug stores.”
For this article we picked 10 stocks Jim Cramer talked about during his latest programs on CNBC. With each company we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Walmart Inc (NYSE:WMT)
Number of Hedge Fund Investors: 95
Jim Cramer in a latest program discussed Walmart’s latest quarterly results which were strong and showed the company is growing despite a weakening consumer sentiment. Cramer highlighted Walmart’s Flipkart growth in China and said while other retail companies are getting crushed in China, Walmart grew. Cramer also pointed to about 21% growth in Walmart’s global e-commerce business.
Jim Cramer said Walmart’s conference call was “heavenly” and highlighted the following comment from WMT CEO during the call:
So far, we aren’t experiencing a weaker consumer overall. Around the world, our customers and members continue to want four things. They want value; they want a broad assortment of items and services; they want a convenient and enjoyable experience buying them; and they want to do business with a company they trust. These four things are constant. But the way we provide them is changing and changing fast. The results we’re delivering are due to real progress across these dimensions. As it relates to value, we’re lowering prices. For the quarter, both Walmart U.S. and Sam’s Club U.S. were slightly deflationary overall.
Jim Cramer also highlighted how WMT is using generative AI to save money and improve efficiency, mentioning this quote from the management during the call:
“We’re finding tangible ways to leverage Generative AI to improve the customer, member, and associate experience. We’re leveraging data and large language models from others and building our own. One example is that we’ve used generative AI to improve our product catalog. The quality of the data in our catalog affects nearly everything we do from helping customers find and buy what they’re looking for, to how we store inventory in the network, to delivering orders. We’ve used multiple large language models to accurately create or improve over 850 million pieces of data in a catalog. Without the use of generative AI, this work would have required nearly 100 times the current headcount to complete in the same amount of time. ”
Here is what Cramer said about this:
“That’s the best use case (of AI) I’ve heard yet…So who says generative AI does not have a use case? It just saved Walmart a fortune.”
Walmart shares are trending after the company threw it out of the park with its latest quarterly results and upped its full-year outlook, crushing all recession-related fears. Walmart executives noted no signs of weakness in August, with narrowing e-commerce losses and an uptick in high-income shoppers. CFO John Rainey said while cautious, Walmart isn’t forecasting a recession, and the back-to-school season is off to a strong start.
Morgan Stanley’s Simeon Gutman highlighted solid comparable sales growth and better-than-expected EBIT growth, driven by core and alternative profit streams. Jefferies’ Corey Tarlowe sees continued upside potential, citing strong traffic and improving e-commerce, with automation and AI likely to play key roles.
Walmart is no longer just a retailer with big stores. Omnichannel retail, ecommerce growth and ads business are the new growth catalysts for Walmart. Wall Street expects 9% EPS growth for Walmart is fiscal 2025, potentially followed by 10% and 12% in FY2026 and FY2027, respectively.
During the NYSE/Bank of America London Investor Conference, Walmart said that it expects revenue growth of 4% per year over the next five years, while operating income is expected to rise 8% per year.
Overall, Walmart Inc (NYSE:WMT) ranks 2nd on Insider Monkey’s list titled Jim Cramer’s Latest Lightning Round: Top 10 Stocks. While we acknowledge the potential of Walmart Inc (NYSE:WMT), 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 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.
