We recently compiled a list of the 8 Best Momentum Stocks To Invest In Right Now. In this article, we are going to take a look at where Walmart Inc. (NYSE:WMT) stands against the other momentum stocks.
U.S. Labor Market Remains Resilient
After the Fed’s rate cut and a positive inflation report, the latest jobs report also showed better-than-expected results. In an interview with Yahoo Finance, Elise Gould from the Economic Policy Institute discussed the latest employment data as she highlighted the continued strength of the U.S. labor market.
Payroll employment increased by 254,000 in September, with revisions adding 72,000 jobs from previous months. The unemployment rate remained stable at 4.1% and showed declines among various demographics, especially among men.
Gould emphasized that the prime-age employment-to-population ratio is at a 23-year high, which shows a strong economy. Despite wage growth reaching 4%, she downplayed concerns that this could lead to inflation and mentioned improvements in productivity and a low labor share of corporate income.
She expressed confidence in the labor market’s strength and suggested that it may influence the Fed’s decisions on interest rates. She also believes that the Fed should normalize rates, which remain high historically given current employment levels.
Gould observed that the overall labor market is strong, but not excessively heated, as shown by softer job turnover rates.
Economic Resilience and Its Impact on the Stock Market
At CNBC’s Closing Bell, Wharton finance professor Jeremy Siegel discussed the impact of the recent economic data on the stock market. He noted that while 550,000 jobs were added in the third quarter, wages remained flat, leading to a GDP growth projected at 2.5% to 3%.
Siegel believes that the Federal Reserve will likely implement smaller rate cuts of 25 basis points rather than larger cuts and will aim for a long-term neutral rate of about 3.5% by the second half of next year.
He expressed optimism regarding the stock market and suggested that the S&P 500 could reach 6,000 by year-end. However, he mentioned that higher yields may present challenges.
Despite concerns about equity valuations appearing high, Siegel pointed out that with cash still abundant and a resilient economy, the market remains attractive. He acknowledged that while the forward earnings ratio for the market is around 21.5x, it is not expensive in the current economic climate. He emphasized the absence of recession indicators and the potential for earnings growth and suggested that while significant market gains may not be expected, there is still room for growth.
Our Methodology
For this article, we looked at the October 2 holdings of iShares MSCI USA Momentum Factor ETF and narrowed our list to 8 stocks most widely held by institutional investors. The best momentum stocks to invest in are listed in ascending order of their hedge fund sentiment which was taken from Insider Monkey’s database of over 900 elite hedge funds.
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).
A manager standing in a hypermarket, pointing out items available for wholesale.
Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 95
Walmart Inc. (NYSE:WMT) is a global omnichannel retailer with operations in approximately 20 countries and serves 255 million customers weekly across 10,500 stores and eCommerce platforms. It is one of the best momentum stocks to invest in.
The company operates stores in various formats including supercenters, discount stores, neighborhood markets, and Sam’s Club. Internationally, its formats are more diverse and include supermarkets, hypermarkets, cash-and-carry stores, and specialty stores among others.
Its innovations in e-commerce, like Curbside Pickup and Walmart+, create seamless shopping experiences that blend with physical and digital retail. The company’s distribution network and private fleet efficiently support its vast supply chain, while its fulfillment centers ensure quick delivery for online orders.
On September 27, Baird analyst Peter Benedict maintained a Buy rating on Walmart (NYSE:WMT) and raised its price target to $90 from $82. The price target revision came in light of the company’s effective transformation into an omnichannel retailer, which has led to increased market share and improved service offerings that attract diverse customer demographics.
The analyst believes that the company is gaining market share in omnichannel retail while also seeing growth in its alternative revenue streams.
Earlier on September 24, Truist upgraded the company shares from Hold to Buy and raised the price target to $89 from $76.
According to Insider Monkey’s database of 912 hedge funds, 95 hedge funds had stakes worth $9.19 billion in Walmart (NYSE:WMT) in Q2. While Fisher Asset Management is the company’s largest shareholder as of June 30, a more significant transaction was seen by GQG Partners. The firm increased its holdings in the company by a whopping 30279% to $1.1 billion in the quarter to become the second largest shareholder, according to our database.
Overall WMT ranks 5th on our list of the best momentum stocks to buy. 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 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.