In the spirit of the greatest tournament in the world — the NCAA men’s Division 1 basketball tournament, of course — we’re pitting some of America’s biggest companies against one another to see which Wall Street darling is actually the nation’s favorite stock.

This particular matchup features one of the biggest names in men’s basketball: Nike Inc (NYSE:NKE) — the premier name in sports apparel, and a company that outfits a score of teams in this sport and just about every other one.

Its opponent is no slouch: Wal-Mart Stores, Inc. (NYSE:WMT), the world’s largest retailer.

Walmart (WMT)

Walmart is a 70-year-old, $265 billion-market-cap retailer operating more than 11,000 stores across 27 companies. The sheer size, scale and influence that WMT has over its suppliers, employees and competitors is simply impressive.

Walmart’s scale gives it the ability to negotiate lower prices from suppliers, which in turn allows WMT to offer customers the lowest possible price in the market. This power is what forms Walmart’s moat against the competition and will allow it to survive for decades to come.

The biggest negative for Walmart investors? Public perception. For one, the big-box retailer’s bulk-powered low prices undercut countless mom-and-pop retailers, prompting many to paint Walmart as simply “evil.” WMT also was harangued for years about its poor employee compensation, though Walmart is changing its mind-set there, agreeing in February to raise its minimum wage to $10 an hour.

Of course, this might not be the best move for investors. Walmart already operates on a thin 4% margin, so higher wages will reduce that profit or prices will have to increase. And if it’s the latter, Walmart’s moat likely will shrink over time.

And if it’s the former? Well, WMT might still be OK with fewer profits. Even at its current margins, Walmart’s $485 billion in revenue still allowed the company to throw off more than $13.5 billion in free cash flow last year. And that money is being given back to shareholders in the form of a current $15 billion share buyback plan and a 49-cent quarterly dividend (good for a 2.4% yield currently).

Nike (NKE)

Nike started out as a distributor of Japanese-made shoes, but in 1971, the company started selling its own shoes bearing the trademark swoosh.

The shoe business is a good one, and Nike dominates it. Last year, Americans spent $4.2 billion on basketball shoes, and Nike accounted for 95.5% of that; Adidas AG (OTCMKTS:ADDYY) had a 2.6% share, Under Armour Inc. (NYSE:UA) accounted for 1% and Adidas subsidiary Reebok eked out a 0.8% share.

But Nike has evolved into more than just a shoe company, now offering sporting equipment, clothing for every activity and even “lifestyle” brands, such as the ubiquitous Jordan brand.

NKE is a revenue juggernaut at $28 billion annually that still has plenty to grow, thanks in no small part to its unbelievable marketing. Nike has convinced consumers that Nike shoes will help them jump higher, that Nike golf balls were fly further, and that Nike apparel will help you work harder and keep your body cooler. People love drinking Kool-Aid, and Nike’s holding the pitcher.

The big problem facing Nike is competition. For decades, NKE’s main competition was more soccer-focused Adidas and also-ran Reebok. However, Under Armour is a dangerous wild card. And it’s not a question of who is better at this point — both make spectacular products driven by surprisingly high technology — but whether the industry is large enough for both NKE and UA to keep growing at their current rates.

Our First-Round Pick: NKE

Personally, I believe both Walmart and Nike are great investments, and each of them will provide sizable returns in the future.

But what makes me love NKE above WMT is brand loyalty — not just here in the U.S., but increasingly worldwide. Loyalty trumps almost any competitive edge, even price. Nike’s loyalty allows it to keep raising prices without losing customers, whereas Walmart has to keep prices low just to keep people around. That’s a much tougher situation.

My vote goes to Nike.

Head back to the Stock Market Madness bracket to vote on your favorite stocks and check out other previews!

As of this writing, Matt Thalman was long UA. You can follow him on Twitter at @mthalman5513.