As many stocks hover around their 52-week lows, investors are wondering if more defensive names with stable dividends, such as Walmart (NYSE:WMT) stock, should be on their 2019 shopping list. For now, I am not expecting a meaningful year-end rally in Walmart stock and I suggest that investors stay on the sidelines. Here’s why.

It is too early to tell if a recession in the U.S. and rest of the world might be upon us. We would need more home-front evidence to support such a claim. Yet, many analysts believe that a slow down is around the corner.

Could it be that the equity markets are already pricing in such an economic development? In that case, very few sectors and stocks would escape the wrath of investors. Eventually, the dust will settle in the equity markets and strong names with robust fundamentals will once again shine. Nonetheless, we are not there yet. As we end a tumultuous year, easy money in stocks is possibly well over.

Is the Fundamental WMT Stock Story Still Intact?

For many investors, Walmart stock — the retail giant that is innovating relentlessly to compete with Amazon (NASDAQ:AMZN) — offers fundamental value and growth potential, as well as proven stability. Analysts are expecting its 2019 digital expansion to be up by 35%.

Yet, one pause for concern is Walmart’s historically high price-to-earnings ratio of 55. If the U.S. economy turns out to be in worse shape than many want to believe, investors will not be willing to pay a high amount for its corporate earnings. Wall Street is, after all, a gauge of how much capital investors are willing to commit to public companies based on their future earnings.

However, as a high-dividend staple that has consistently paid dividends for over four decades, the WMT stock price is likely to be immune to prolonged suffering. Furthermore, with a market cap of almost $256 billion, it would be safe to assume that WMT stock is unlikely to get held down by the market for too long. The Street tends to regard large market cap companies as stable long-term investments.

When Is a Good Time to Buy Into Walmart Stock?

The answer depends on your evaluation of the fundamentals of the U.S. economy and of Walmart stock at this point. Year-to-date, the WMT stock price is down 7% and its 52-week price range has been $81.78 (May 24, 2018) – $ 109.98 (Jan. 29, 2018). Investors who pay attention to short-term moving averages and oscillators should note that WMT’s technical message is a “sell.”

In early December, the price tested but could not go over the psychologically significant $100 level. I expect Walmart stock to re-test the low-$80’s before too long. In late January 2019, it is likely to see a new 52-week low around the anniversary of last year’s high on Jan. 29, 2018.

If you already own Walmart stock, you might want to hold your position. However, within the parameters of your portfolio allocation and risk/return profile, you may consider placing a stop loss at about 3-5% below the current point.

If you are looking for an entry signal to buy WMT shares, both from a technical chart perspective and based on the broader market realities, I am not expecting the stock to make a significant leg up any time soon. You may want to wait for the release of the next quarterly statement in February 2019 to re-evaluate the balance sheet and the economic fundamentals in the U.S.

The Bottom Line on WMT

I believe that Walmart stock has a strong story and with a clean balance sheet, it remains a long-term growth play on a fundamental basis. However, there might still be weakness in the WMT stock price in the near-term that potential WMT investors should anticipate.

Along with most of the darlings of Wall Street, Walmart stock will need to stabilize and build a base again before a long-term sustained leg up can occur.

As of this writing, Tezcan Gecgil did not hold a position in any of the aforementioned securities.