Covid-19, geopolitics, higher interest rates and increasing inflation are some of the bogeymen now spooking investors, notes John Buckingham, value investor, money manager and editor to The Prudent Speculator.

Nevertheless, history is filled with plenty of frightening events, yet equities have provided handsome returns for those who stick with stocks through thick and thin.

Certainly, we are not seeking to downplay that the resurgence of the Taliban alters the landscape in Asia and the Middle East, while elevating the threat of terrorism, but the U.S. equity markets were seemingly more concerned about the continued rise in domestic COVID-19 cases and the potential impact on economic growth.

To be sure, we respect that the major market averages are still near all-time highs, while numerous stocks are richly priced, overvalued or impossible-to-value.

But, as individual stock pickers, we can avoid the expensive names and construct portfolios with very generous income streams. Here's a look at two large cap retail stocks in our portfolios that recently announced quarterly earnings.

Discount store and superstore giant Walmart (WMT) reported EPS of $1.78 in fiscal Q2, 13% ahead of the $1.57 estimated by analysts. Total revenue grew 0.6% on a constant currency basis to $138.6 billion, negatively affected by approximately $8.9 billion related to divestitures in the International segment.

Sam’s Club comparable sales and eCommerce sales grew 7.7% and 27%, respectively, while membership income for Walmart+ increased 12.2% with member count reaching an all-time high.

Management has repurchased $5.2 billion worth of stock year to date, representing around 25% of the $20 billion authorization announced earlier this year.

There is no doubt that competition is fierce within retail, but we continue to be impressed by Walmart’s transformation and execution to build a customer-centric seamless omni-channel ecosystem. This includes integration of its eCommerce, grocery and general merchandising businesses, as well as the continued rollout of various ways for guests to shop.

And, although the Indian government has threatened to fine Flipkart on suspicion of foreign investment rule violations, we continue to think these investments (along with, and its foray into service sectors like Health Care, FinTech and others, lengthen the retailer’s runway for growth and diversify revenue.

WMT continues to generate strong free cash flow, which underpins its generous capital returns programs. With the continued operational momentum, we have boosted our target price for WMT to $175.

General merchandise discount store chain Target (TGT) reported fiscal Q2 EPS of $3.64 (vs. $3.48 est.) on revenue of $24.83 billion (vs. $24.51 billion est.). Comparable store sales increased 8.9% (vs. 8.2% est.), while the 30.4% gross margin came in 0.1% lower than the consensus estimate.

Target’s digital sales accounted for approximately 17% of revenue. The board approved a new $15 billion share buyback program and expects “high single digit” comparable sales growth in the back half of the fiscal year.

Long before the pandemic, Target made big changes on the heels of a disastrous expansion into Canada. The company added small-format stores, shifted to a ship-from-store model to make retail stores into miniature distribution centers and made big investments in its mobile phone app.

While the pandemic caused significant challenges related to the supply chain, the investments in the core business paid off handsomely and we think folks have gotten used to some of the convenience (such as parking lot pickup and same-day shipping).

We believe the improvements when considered as a whole put Target in the #1 spot for big box retailers in the country and we expect the company to continue to benefit from the updates.

While Target has continued to return cash to shareholders in large quantities via repurchases and buybacks, the company is also remodeling stores (which results in more spending per customer and more visits) and is collaborating with brands such as Ulta Beauty to drive traffic.

Target-owned brands such as Cat & Jack have proven popular with consumers looking for value, while premium products from the likes of Apple and Disney draw higher-end customers.

Target raised its quarterly dividend to $0.90 per share, resulting in a yield of 1.4%. The company’s valuation metrics are still reasonable, including a forward P/E near 20 and our target price stands at $275.

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