It’s Time To Pull The Trigger On Walmart (NYSE:WMT)

Walmart Has Corrected, It’s Time To Buy Some More

Shares of Walmart (NYSE:WMT) hit an all-time earlier this month driven by rising revenue, growing profits, and tailwinds from the pandemic. Since then, the stock has corrected more than 10% and offering up an attractive entry for long-term investors. Even if the stock continues to correct, it is still a buy. The fundamental story for this company has taken on a new tone that suggests not only will Walmart continue to grow, but it will also continue to rival Amazon for the digital market share. With eCommerce growing at a high double-digit pace that a big deal.

Walmart Is Buying TikTok?

You might not have thought of Walmart as a tech company but in this day and age, all companies are tech to some degree. Walmart saw its eCommerce sales surge nearly 100% in the last reported quarter and those gains are expected to stick. The reason Walmart has been soo successful is because of an early push to compete with Amazon that has been accelerated by the pandemic. Not only are Americans still distancing but they’ve been introduced to the ease of shopping online.

We know the company has been killing it on eCommerce and it doesn’t look like management is content to rest of on their laurels. The TikTok deal seems a little weird at first, why would Walmart want to buy into an app, but there is an eCommerce angle that can’t be overlooked. The sole purpose of apps like TikTok is to drive traffic for monetization which usually means advertising. Walmart’s gain in this deal is providing omnichannel and fulfillment services in the U.S. which are expected to bring in substantial revenues.

Walmart Is Getting Aggressive About Growth

Walmart is one of the world’s largest companies with revenue expected to top $550 billion in fiscal 2022. That makes it hard to grow but not impossible and in today’s environment, there is no shortage of opportunity. No few retailers and manufacturers of apparel have gone bankrupt during the pandemic leaving a gap Walmart is ready to fill. To that end, the company has decided to launch a new clothing label called Free Assembly. Targeted at young adults the brand is designed by Dwight Fenton who is a veteran of Bonobos, J. Crew, and Old Navy.

Walmart Is A King Of Dividend Payers

Walmart is not only a mega-cap growth story and a play on e-commerce it is a near-Dividend King. The company has been steadily increasing its dividend payment for 47 years and there is no reason not to expect another increase in calendar 2021. In fact, based on history, the first distribution in 2021 should come with an increase but don’t expect it to be very big. Walmart has ample room on the balance sheet but not so much it can hike its payments with abandon, not if it wants to achieve true Dividend King status.

The Technical Outlook: Walmart Pulled Back To A Strong Support Level

Shares of Walmart have corrected about 10% from the recent peak and look like they may be finding support. The move has price action down at the $135 level which is a point of previous resistance and confirmed by the short-term moving average. Momentum is still bearish but that could be about to change. Momentum is not over strong, price action is sitting on support, and the stochastic is showing oversold conditions which together add up to a buying opportunity. If support is unable to hold at these levels the next target for entry is near $130.