We recently published a list of The 10 best retail stocks to buy now. In this article, we take a look at how Walmart Inc. (NYSE:WMT) compares to other retail stocks.
Technology is revolutionizing retail
The rise of technology and artificial intelligence (AI) in recent years has impacted not only the technology sector but the entire market. Retail has not been spared from this impact either. Analysts now consider technology-enabled innovations to be one of the main drivers of the retail sector’s growth. As a result, those retailers who take technology upgrading seriously and make investments to integrate new technologies into their operations are finally attracting the market’s attention.
On June 24, Simeon Gutman, analyst at Morgan Stanley, CNBC’s “The Exchange” to discuss the impact of technology and AI on retail and how these companies are using technology to increase their profit margins. Here are some of his comments on the retail companies to watch in this regard:
“Walmart is the company that comes to mind first… Walmart is hitting the nail on the head with several of these aspects of technology adoption, and on top of that, they’re gaining market share in terms of technology adoption. AI is clearly one of them: big scale, big data, lots of ways to mine their data and improve both the front end of their business, get more sales to customers, make things easier, and improve the back end.”
According to Gutman, wholesalers are the industry winners when it comes to integrating innovative technologies into their internal operations. With these innovations in retail and the resulting higher profit margins for retailers, it’s safe to assume that retail is making a rapid comeback in the market.
Outlook for the retail sector 2024
According to the WTW Global Retail Survey for 2024, 52% of retailers this year generally expect increased profitability within two years. In addition, more retailers today (48%) are looking to integrate artificial intelligence into their operations to provide their customers with a personalized shopping experience. However, the rise of technology and AI in the industry has also led some retailers (43%) to express concerns about higher cybersecurity risks posed by a greater reliance on new technologies.
Despite the risks involved, most retailers today are embracing AI integration to meet customer demands. According to the survey, AI is particularly favored by pure-play online and e-retailers due to its potential to drive growth. By helping retailers automate their processes and supply chain operations, AI and new technologies can enable retailers to provide personalized experiences and recommendations to their customers. This is an exceptionally important feature in today’s market as consumers become increasingly reliant on new technologies and their benefits in their everyday lives.
Our methodology
We combed through ETFs and online rankings to compile a list of 25 retail stocks. We also used the Finviz stock screener to check that we didn’t miss any popular stocks. For this list, we considered clothing retailers, discount retailers, department stores and home improvement stores. From our initial pool of 25 stocks, we selected and ranked 10 stocks that were most popular with institutional investors. The stocks are sorted in ascending order of the number of hedge funds that hold shares in them.
Why do we care about the stocks hedge funds invest in? The reason is simple: Our research has shown that we can outperform the market by mimicking the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (Further details can be found here).
A manager stands in a hypermarket and points to items available for wholesale sale.
Walmart Inc. (NYSE:WMT)
Number of hedge fund owners: 88
Walmart Inc. (NYSE:WMT) is a consumer goods company based in Bentonville, Arizona. It operates supercenters, supermarkets, hypermarkets, warehouse clubs, cash-and-carry stores, and discount stores.
The average analyst price target for Walmart Inc. (NYSE:WMT) is $73.4 as of June 28. In addition, Evercore ISI Group reiterated its Outperform rating on the stock on June 20.
In the first quarter, Walmart Inc. (NYSE:WMT) reported adjusted sales growth of 5.8%. The company is leveraging technology in retail through its online subscription service Walmart+, which offers customers free delivery and efficient payments.
In the first quarter, 88 hedge funds held shares in Walmart Inc. (NYSE:WMT). Their total stake value in the company was $7.7 billion.
Total WMT 1st place on our list of the best retail stocks to buy. You can visit The 10 best retail stocks to buy now to see the other retail stocks that are on hedge funds’ radar. While we recognize WMT’s potential as an investment, we believe AI stocks promise higher returns and do so in a shorter time frame. If you’re looking for an AI stock that’s more promising than WMT but trades at less than 5x earnings, read our report on the cheapest AI stock.
READ MORE: Analyst sees a new $25 billion “opportunity” for NVIDIA And Jim Cramer recommends these 10 stocks in June.
Disclosure: None. This article was originally published on Insider Monkey.
