According to the latest analyst call, Walmart (NYSE:WMT) is gaining traction with consumers. Still, is now a good time to buy WMT stock? Let’s take a look at what’s happening off and on the price chart for a more well-informed buy decision that won’t leave you shopping for deeper discounts where none exist. Let me explain.
So far, 2019 has been a gift for Walmart stock. Compared to a gain of 22% in the VanEck Vectors Retail ETF (NYSEARCA:RTH), shares of Walmart are up 29% and hitting fresh all-time-highs on Tuesday. At the same time, WMT’s burly gain is also outstripping the S&P 500 index’s return of 19% this year by more than 50%.
The latest traction in WMT shares appears to be some carryover from a bullish analyst note out of brokerage Robert Baird from Monday’s session. Analysts at the firm haven’t exactly been strangers in enthusiastically plugging Walmart stock. Nevertheless, by and large, they’ve been on the right side of the price action and that’s to be respected.
After a meeting with Walmart’s management, Baird is making the pitch that the world’s largest retailer continues to transform its core retail capabilities and re-brand its culture in a way that’s gaining traction with consumers. The takeaway was enough for the broker to raise its price target on WMT stock to $130 from $120 despite ongoing trade war-related tariff risks, as well as the possible implications of a softer global economy and consumer.
Walmart Stock Price Monthly Chart
This year has been a very different environment for WMT bulls compared to its arch-rival Amazon (NASDAQ:AMZN). As mentioned earlier Walmart stock is up about 29% in 2019. At the same time, AMZN stock is up about 16%. A year ago, who would have thought that was possible, right?
At the end of the day AMZN’s return is nothing to snicker about. Still, the result is roughly half the performance of Walmart shares and trailing the broader market as well. The irony is Walmart’s current success has everything to do with Amazon and learning to thrive in today’s e-commerce environment. It didn’t always look like that was going to be the case, but you have to give credit where credit is due. Bottom line, Walmart has evolved. And for its part Wall Street is showing its approval.
Aside from shares outperforming AMZN and the broader market, Walmart stock has also cleared key resistance from early 2018 and mature channel resistance dating back several years. That’s big for investors. What’s more, shares are now trading in a more uniformly bullish and tight channel pattern.
Overall, I like what I’m seeing in Walmart shares. So far, 2019’s price action appears to be the start of a more prolonged bullish phase for WMT stock. Still, with shares up against the newly formed channel resistance and stochastics overbought, I’d hold off for a short time, but not too long.
In our view, waiting to buy on a modest price break closer to chart support near $114 makes sense given today’s market. To be sure, this entry isn’t far removed from today’s Walmart stock price of $118.75. But with a new kind of sensibility at Walmart happening off and on the price chart, the deep discounts of days past in WMT stock may be harder to come by.
As well and at the same time, every dollar saved is still almost like a dollar earned when entering into a long position in Walmart stock.
Disclosure: Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
