Wal-Mart: An "All-Weather" Favorite

11/14/2019 5:00 am EST


Jim Powell

Principal Analyst, Global Changes & Opportunities Report

In my opinion, the retailer that’s most likely to make the best use of the weakening economic conditions is Walmart (WMT), explains Jim Powell, editor of Global Changes & Opportunities Report.

The company operates 11,300 discount stores, supermarkets, supercenters, warehouse clubs, and home improvement stores in 27 countries. It also owns Sam’s Club.

Walmart has been hugely successful. The company captures 25% of every dollar spent on groceries in the US. In 43 metropolitan areas, and in 160 smaller markets, Walmart captures over 50% of the area’s grocery revenues. 3 Some 1,500 additional stores are planned for areas where Walmart has yet to serve.

Walmart’s management knows that Internet sales also have the potential to be a major profit center. The company now has an impressive online store that it ambitiously plans to compete with Amazon (AMZN) in the areas where products overlap.

At the same time, Walmart is increasing its human touch. Greeters are being reintroduced in most stores, and more “associates” are being put on the floor to serve shoppers and increase sales.

I don’t know of any other retailer that can match Walmart’s ability to anticipate consumer preferences, and offer appropriate products at attractive prices. Moreover, the company can move quickly to make use of changing  As one analyst said recently, “Following Walmart is like watching an elephant dance.”

Most importantly – Walmart has decided to take on the healthcare industry and provide many medical services for a fraction of what is usually charged. If the venture becomes as successful as I expect, Walmart’s profits will soar.

The first Walmart Health Clinic is opening alongside its superstore in Dallas, Georgia. The clinic will offer primary care, dental services, labs & x-rays, health screening, optometry, hearing, fitness & nutrition, disease management, and vaccinations – to name only the biggest

Walmart is not rushing blindly into the health care business. Dental care, optometry, and other medical services have been offered inside many of the company’s stores for years.

The company also operated mini-clinics inside stores in Texas, South Carolina, and Georgia. In addition, Walmart has become one of America's largest pharmacies — with $35 billion in annual sales.

Walmart is in S&P’s elite group of Dividend Aristocrats that raised their payouts for at least 25 consecutive years. Walmart actually increased its dividends for 41 years – and should continue to do so for many more.

Walmart’s yield is currently only 1.80%, but investors should see their returns grow steadily. Although there is no such thing as a “buy it and forget it” stock, Walmart comes close.

Indeed, if you are a conservative investor who only wishes to buy one all-weather stock that should do well during an economic downturn, I think it should be Walmart.

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