Walmart (WMT) has weathered countless economic cycles in its 60-plus year history, and in my opinion, the company continues to thrive despite economic downturns. I am currently bullish on the stock. With its reputation as a low-cost retailer that offers both essential and non-essential items, Walmart has delivered investors a 38% gain year-to-date. Shares have nearly doubled in the past five years, and recent financial reports reinforce my belief that Walmart will continue to defy economic challenges and thrive.
Walmart thrives despite economic challenges
Despite the current economic challenges, I remain bullish on Walmart. The economy is in trouble, and while employment numbers may look pretty good, inflation has put a huge strain on many people’s budgets, leading to more people living paycheck to paycheck. As consumers make fewer essential purchases, many companies are reporting slowing sales growth, with some even reporting year-over-year sales declines.
However, Walmart’s strong position is a key reason for my optimism. People still need to buy essentials and are increasingly opting for the cheapest and most convenient options. Walmart excels in this space, offering a wide range of products – from groceries to clothing – at competitive prices. This combination of convenience and affordability helps Walmart stand out and minimizes investor losses during times of economic slowdown.
In addition, Walmart is attracting a broader customer base, including more affluent consumers who want to save money and shop conveniently. This trend suggests that Walmart could retain these customers even as the economy recovers, further improving its growth prospects.
While competitors like Target (TGT) are struggling with declining sales, Walmart is well positioned to capture a larger market share. The ongoing battle between Walmart and Costco (COST) for retail dominance underscores Walmart’s great potential to thrive even in tough economic times. This solid performance during difficult times reinforces my positive view on Walmart stock.
Walmart shows strong performance
Despite slower economic cycles, Walmart’s recent performance supports my bullish view on the stock. The company not only manages to thrive in economic downturns, but also shows significant growth during economic booms. Recent results show Walmart’s continued expansion and strength even in a strong economy. For the second quarter of fiscal 2025, Walmart reported a 4.8% year-over-year increase in consolidated revenue, reaching $169.3 billion.
Due to this strong performance, the company increased its guidance for fiscal 2025, projecting net revenue growth between 3.75% and 4.75% for the year. Revenue for the third quarter of fiscal 2025 is expected to increase between 3.25% and 4.42% year-over-year.
Walmart’s e-commerce and advertising segments are also performing well. Online sales increased 21% year over year, driven by the success of pickup and delivery services and Walmart’s growing marketplace. This growth in e-commerce is a key factor in Walmart’s ability to gain market share.
Additionally, Walmart’s global advertising business saw revenue increase 26% year over year, with Walmart Connect growing 30% in the U.S. Although advertising represents a smaller portion of Walmart’s overall revenue, its higher margins and extensive customer base—the company serves more than 37 million customers daily and over 255 million weekly—provide significant opportunities to increase profits.
Overall, Walmart’s strong performance across multiple areas makes it clear that the company is in a good position. Whether the economy is going up or down, the company’s strength and growth potential are clear to see.
Walmart’s foreign sales are growing faster than domestic sales
Walmart’s significant presence in both the U.S. and international markets reinforces my bullish view of the stock. With over 5,000 retail stores in the United States and more than 10,600 worldwide, Walmart’s expansive footprint offers significant potential for long-term growth, which is clearly reflected in its latest earnings report.
International sales grew 7.1% year-on-year, outpacing the 4.1% increase in U.S. sales. This success was largely due to Walmart’s strategic investment in Flipkart, which has resulted in higher international e-commerce sales and advertising revenue. In addition, Walmart’s strength in grocery and consumer goods, which accounts for more than half of its total sales, remains a key driver in both the domestic and global markets.
Overall, Walmart’s enormous reach and successful international ventures underscore the company’s ability to support high growth rates, further reinforcing the positive outlook for investors.
Is WMT stock a buy according to analysts?
Wall Street analysts are optimistic about the stock and believe it still has room to grow. 30 analysts rate the stock as a “Strong Buy” and predict an upside potential of 1% from the current price. The highest price target of $81 suggests that Walmart stock could gain another 11%.
View more WMT analyst ratings
The conclusion on Walmart shares
Walmart is a defensive stock that can continue to rise during strong economic cycles. More than half of the company’s total revenue comes from grocery, which provides the company with a hedge during times of economic slowdown.
Meanwhile, sales continue to grow. The company is gaining ground in domestic and international markets, with promise of growth in e-commerce and advertising. In my opinion, Walmart’s strategic investments to diversify its sales and generate higher returns for long-term investors reinforce my bullish outlook for the stock. So far, that has paid off for investors, as the stock has outperformed the S&P 500 over the past five years.
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