We recently compiled a list of the 14 Best 52-Week High Stocks to Buy According to Short Sellers. In this article, we are going to take a look at where Walmart Inc. (NYSE:WMT) stands against the other 52-week high stocks.
The U.S. stock market has been on a roll, with major indices clocking double-digit gains even with the U.S. economy showing signs of weakness. The gains have come from investors shrugging off the uncertainty around the U.S. presidential election and monetary policy to continue betting on various counters.
Consequently, the S&P 500 is already up more than 17% for the year, driven by gains in the communication services and financial services sectors. Likewise, technology stocks have also contributed to driving the overall market high as investors continue paying close attention to some of the big plays around artificial intelligence.
READ ALSO: 18 Best 52-Week Low Stocks to Buy Now According to Short Sellers and Top 10 ADR Stocks To Buy According to Hedge Funds.
The tech-heavy NASDAQ index, which gained 18% for the year, comes on growing expectations that the U.S. Federal Reserve has hit the peak of its monetary policy tightening spree. With expectations that the central bank will start cutting interest rates by as much as 50 basis points, according to CNBC, investors’ sentiments around tech stocks have improved significantly for September.
Investors remain optimistic about the stock market outlook heading into year end because of the positive impact of low interest rates. The Fed’s cutting interest rates will result in a significant drop in borrowing costs, which bodes well for capital-intensive businesses looking to access cheap capital.
The central bank aims to achieve a soft landing for the economy. In this situation, inflation must return to the 2% goal without the U.S. economy sliding into a downturn. If the central bank reduces interest rates prematurely, it faces the danger of a severe surge in inflation. Conversely, if it reduces rates too late, it might cause a severe recession.
While interest rate cuts are expected to offer a much-needed boost, disappointing earnings, and lackluster guidance could curtail market gains, especially for the best 52-week high stocks to buy, according to short sellers.
Several companies are under immense pressure after their valuation skyrocketed amid the artificial intelligence frenzy. Consequently, any concerns about slow earnings and revenue growth should send jitters, triggering significant pullbacks.
Adam Turnquist, the head of technical strategy at LPL Financial, mentioned that the S&P 500 typically experiences about three annual declines of at least 5%. On average, it has seen around one 10% decline each year.
“Expressing this data another way, 94% of years since 1928 have experienced a pullback of at least 5%, and 64% of years have had at least one 10% correction,” Turnquist said, according to USA Today. “We believe that how common these occurrences are should provide comfort to equity investors, allowing them to be patient.”
Looking forward to the rest of the year, experts predict that the best 52-week high stocks to buy, according to short sellers, could keep rising, but they caution about the dangers of premium valuations.
At the same time, financial experts believe that although economic expansion will slow down in the next few months, they don’t see a situation that could cause a recession.
Our Methodology
To compile the list of the best 52-week high stocks to buy now, according to short sellers, we first screened for stocks that were trading near their 52-week highs (0-10% range) using the Finviz stock screener. Next, we looked at their short interest and picked the stocks with the lowest short interest that were the most popular among elite hedge funds. The stocks are ranked in descending order based on their short interest.
At Insider Monkey, we are obsessed with 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).
A manager standing in a hypermarket, pointing out items available for wholesale.
Walmart Inc. (NYSE:WMT)
52 Week Range: $49.85 – $ 76.45
Current Share Price: $76.08
Short interest rate: 0.50%
Number of Hedge Fund Holders: 95
Walmart Inc. (NYSE:WMT) is the world’s largest retail outlet, operating supercenters, supermarkets, hypermarkets, warehouse clubs, and discount stores. It has grown beyond its initial role as a conventional store-based retailer and transformed into a multi-channel entity.
This transformation is highlighted by its strategic mergers and acquisitions, collaborations, delivery initiatives like Walmart + and Express Delivery, and investments in digital e-commerce platforms like Flipkart. These moves enable the company to adapt to the evolving retail landscape and maintain its competitive edge against competitors such as Amazon and Target.
Walmart Inc. (NYSE:WMT) is one of the best 52-week high stocks to buy, according to short sellers on its latest earnings report, impressing Wall Street while affirming underlying growth. Revenues in the quarter came at record highs of $169 billion, up 4.8%, beating estimates of $168 billion. E-commerce sales saw a remarkable 21% growth worldwide, reflecting Walmart’s expanding digital reach. In the end, the company posted earnings of $0.67 a share, above estimates of $0.65.
Looking ahead, the retailer anticipates its third-quarter net sales will grow by between 3.25% and 4.25%, accompanied by an increase in operating income of between 3.0% and 4.5%. For the entire fiscal year 2025, net sales are expected to see a growth range of 3.75% to 4.75%, with an adjusted operating income projected to rise between 6.5% and 8.0%.
Walmart Inc. (NYSE:WMT)’s solid performance in different areas, such as e-commerce and its membership program, underscores its strong business model and optimistic future prospects.
While trading close to its 52-week highs, Walmart trades at a price-to-earnings multiple of 31, slightly above the consumer cyclical average P/E of 24. Nevertheless, it rewards investors with a solid 1.09%, affirming why it is one of the best 52-week high stocks to buy, according to short sellers.
By the end of Q2 2024, 95 hedge funds held stakes in Walmart Inc. (NYSE:WMT), totaling $9.19 billion. As of June 30, Fisher Asset Management was the largest shareholder, with a position valued at $3.08 billion.
Overall WMT ranks 3rd on our list of the best 52-week high stocks to buy according to short sellers. 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 timeframe. If you are looking for a promising AI stock 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.