If you want to invest in a retail store chain that will definitely be here for future generations, the most obvious choice is Walmart (NYSE:WMT). Even during economic recessions, WMT stock tends to hold up comparatively well.
Yet, even great stocks pull back from time to time. That’s the reality of the markets: in the short term, they’re driven by sentiment.
When sentiment becomes irrational in the short term … that’s when enterprising investors seize the moment. After all, Walmart isn’t a company that’s in any real, lasting trouble.
Maybe you already own the stock and you’re not thrilled the share price pulled back. Rest assured that you own a winner that’s bound to recover. Walmart is big enough to withstand just about anything.
WMT Stock at a Glance
If you want to see just how resilient WMT stock is, observe its behavior during the onset of the novel coronavirus.
At the end of 2019, the stock hovered around $119. Then, the Covid-19 crisis happened and practically the entire stock market plunged.
The S&P 500 ended up declining around 34%. Yet, Walmart shares only fell to around $104. Thus, it only went down around 12% or 13% from $119. After this brief period of turbulence, it recovered very quickly.
By Feb. 17 of this year, WMT stock was trading at $147. However, the shares retreated to around $129 and change on the morning of March 9. Is this a problem, or an opportunity?
I would view it as an opportunity. The stock pays a forward annual dividend yield of 1.72%, and its trailing-12-month price-to-earnings ratio is quite reasonable at 27.2.
On top of that, the stock’s five-year monthly beta is 0.47, meaning that the stock moves about half as fast as the S&P 500. In other words, it’s still a terrific stock for safety-minded investors, and the pullbacks shouldn’t intimidate you.
Investing in What Really Matters
As big as Walmart is, the company continues to push forward with major investments in its future, and the future of the nation.
Reportedly, the retailer has plans to invest $350 billion over the next 10 years in products that are made, grown or assembled in the U.S. In doing so, Walmart says the company will help to create 750,000 jobs.
These American-made products will include textiles, plastics, small electrical appliances, food processing supplies, and pharmaceutical and medical supplies.
This initiative is similar to Walmart’s 2013 commitment to invest $250 billion in products grown or assembled domestically.
“U.S. manufacturing really matters,” elaborated Walmart U.S. Chief Executive John Furner. “More businesses are choosing to establish their manufacturing operations in the United States, and the result is more jobs for Americans — a lot more jobs,” he added.
Good for Walmart, Good for America
Sometimes it’s easy to forget just how huge and influential Walmart really is. The company has:
- Nearly 4,800 stores in the U.S.
- $524 billion in sales last year
- Around 1.5 million U.S. workers employed
- Thousands of suppliers
These numbers should offer assurance that buying the dip in WMT stock is a sensible strategy.
Investors should also rest assured that Walmart’s efforts are fully in line with President Joe Biden’s vow to prioritize domestic production.
In January, the Biden administration ordered government agencies to buy more American-made goods.
In the announcement accompanying that executive order, the White House said, “These investments will help create well-paid, union jobs, and build our economy back better so that everybody has a fair shot at the middle class.”
When you invest in Walmart, you’re effectively wagering that America will recover from its economic troubles. That’s a pretty reasonable bet.
In buying WMT stock on the dip, you’re not trying to get rich overnight.
Instead, you’re taking a position in a dividend payer with a reasonable P/E ratio. And, you’re betting on America’s resilience while investing in the domestic job market – not a bad bet to make at all.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.