Shares of retail behemoth Walmart (NYSE:WMT) have been trending higher in recent sessions, now closing in on all-time highs hit back in November 2023. For a stock that’s finally breaking out of a more than three-year-long consolidation channel, the retail behemoth’s continued ascent seems worth getting behind as the stage looks set for higher highs in 2024.
With no shortage of bulls — shares of WMT currently have a Strong Buy rating — in the Wall Street analyst community, it’s hard not to be bullish on the old-school retail giant that’s betting big on tech as it continues to adapt to the digital (and now artificial intelligence) age.
In this piece, we’ll look at key factors that could help Walmart march higher in 2024 and beyond as the resilient and defensive company looks to new growth horizons. Though some investors may perceive Walmart as a boring, low-tech stock to own if you think an economic recession will be on the horizon, I view it as so much more.
As certain high-tech efforts begin to pay off, count me as unsurprised if the $454 billion behemoth can use its size to its advantage and perhaps win over a greater chunk of market share in the competitive retail scene.
The New Walmart Seems to Be Worth a More Premium Price Tag
Unless you’re a member of the Magnificent Seven cohort, it’s pretty hard to grow as the effects of corporate aging begin to weigh. Over the years, Walmart has shown that it’s more than willing to invest in tech to keep its turf in the retail scene. Apart from its modernization efforts (bolstering e-commerce, delivery, and the Walmart+ service), Walmart seems ready to expand its footprint further.
The company recently announced its intention to open 150 new stores over the next five years. As the company bets on brick-and-mortar while continuing to fire on all cylinders on the e-commerce front, Walmart certainly seems like the discount omnichannel retailer to beat. And for that reason, WMT stock may be deserving of a richer multiple than it’s currently commanding.
At writing, WMT stock trades at a respectable 28.1 times trailing price-to-earnings (P/E), which is on the lower end of the five-year historical average P/E of 32.0 times.
Of course, Walmart may not be the digital retailer with the e-commerce edge. That title goes to e-commerce kingpin Amazon.com (NASDAQ:AMZN). On the front of brick-and-mortar, one could make a pretty strong argument that rival Costco (NASDAQ:COST) has the wind at its back.
Have you seen the crowds over at your local Costco lately? They certainly seem larger than over at the local Walmart as bargain-hungry consumers look to fill up their super-sized shopping carts.
In any case, Walmart may not be the master of brick-and-mortar or digital, but it seems to have a solid presence in both realms. And for that reason, I consider it one of the more intriguing omnichannel players in mega-cap retail right now.
To thrive in the future of retail, I believe you really need to be thriving online and offline. You don’t need to be the top dog in either, but it pays dividends to have top-notch presences in both realms. In that regard, Walmart deserves an A-grade and perhaps a multiple that’s more in line with some of the pricier retail heavyweights out there.
From “Great Value” to AI, There’s Plenty to Look Forward To
Costco may have the Kirkland Signature private label, which is of great value to consumers. But Walmart has its own label, “Great Value,” which has helped consumers save a ton of dough amid the past few years of inflationary pressures. Meanwhile, Walmart has been dabbling with conversational AI to help enrich the overall customer experience.
As the company looks to improve upon its label in the post-inflation economy, it’s hard not to imagine many consumers sticking with the “Great Value” brand that may just be able to give Kirkland a run for its money. As the company bolsters its digital presence further, it may finally have something over its red-hot rival, Costco.
As Walmart continues investing in its robust private labels and AI technologies, the company stands to make it easier for consumers to save money on all their favorite necessities and discretionaries.
Is WMT Stock a Buy, According to Analysts?
On TipRanks, WMT stock comes in as a Strong Buy. Out of 29 analyst ratings, there are 25 Buys and four Hold recommendations. The average WMT stock price target is $180.14, implying upside potential of 6.8%. Analyst price targets range from a low of $163.00 per share to a high of $210.00 per share.
The Bottom Line on Walmart Stock
Stash Walmart in the low-tech basket, if you will, but I think it’s doing a lot of the same things that helped make its rivals (Costco and Amazon) great. If Walmart can continue improving on the tech front, I have no doubt that it can benefit from a great deal of valuation multiple expansion over the coming years.