Walmart broke out of a Darvas Box last week with support and resistance from $74 to $82. In fact it broke out of a previous $64 to $74 Darvas Box earlier in the spring as it broke through its 40 week moving average and continued to move higher. It's a classic upward trend movement and it continued higher last week. All this appears to be the result of recent acquisitions by Walmart as it attempts to compete more aggressively against Amazon. In fact it may be the only retailer large enough to compete successfully
The reason for all the excitement is Walmart's integration of JD.com which is expected to increase online sales for the retailer by 40% over the next year. And I think they can do it. In fact several analysts are estimating that the price of Walmart stock will eventually rise to $110 per share over the next 18 months. That's an almost 28% return. Add in the dividend and the total return exceeds 30%.
As a result, I'll be adding to my position in Walmart shares in the weeks and months ahead. Personally I think the time to buy these shares were last week as it broke above $82 but I'd really have to be nimble to have gotten these shares quickly. So my plan will be to put in a buy order at $83 per share to attempt to buy these shares on a pullback to support.
This often happens to companies as they get trapped into a new Darvas Box. While I can't predict the limits of any new box, a good estimate would be $82 to $90. That means for me a price of $86 is not where I'd want to buy. That would allow for a $4 profit potential and a $4 loss potential. That's not the ratio I would want. At $83 I'd have a potential loss of $1 and a potential profit of $7, and that's a great profit to loss ratio for entry. It also lowers my risk if I made a mistake and I'm wrong.
So I've placed these shares on the list of Best Ideas for this week. In fact I believe the analysts may be a little conservative and Walmart may achieve these benchmarks even earlier. Perhaps within the next 12 months.
The reason for all the excitement is Walmart's integration of JD.com which is expected to increase online sales for the retailer by 40% over the next year. And I think they can do it. In fact several analysts are estimating that the price of Walmart stock will eventually rise to $110 per share over the next 18 months. That's an almost 28% return. Add in the dividend and the total return exceeds 30%.
As a result, I'll be adding to my position in Walmart shares in the weeks and months ahead. Personally I think the time to buy these shares were last week as it broke above $82 but I'd really have to be nimble to have gotten these shares quickly. So my plan will be to put in a buy order at $83 per share to attempt to buy these shares on a pullback to support.
This often happens to companies as they get trapped into a new Darvas Box. While I can't predict the limits of any new box, a good estimate would be $82 to $90. That means for me a price of $86 is not where I'd want to buy. That would allow for a $4 profit potential and a $4 loss potential. That's not the ratio I would want. At $83 I'd have a potential loss of $1 and a potential profit of $7, and that's a great profit to loss ratio for entry. It also lowers my risk if I made a mistake and I'm wrong.
So I've placed these shares on the list of Best Ideas for this week. In fact I believe the analysts may be a little conservative and Walmart may achieve these benchmarks even earlier. Perhaps within the next 12 months.
Wal-Mart Stores, Inc. operates retail stores in various formats worldwide. It operates through three segments: Walmart U.S., Walmart International, and Sam's Club. The company operates discount stores, supermarkets, supercenters, hypermarkets, warehouse clubs, cash and carry stores, home improvement stores, specialty electronics stores, apparel stores, drug stores, convenience stores, and membership-only warehouse clubs; and retail Websites, such as walmart.com and samsclub.com, as well as mobile commerce applications. It offers grocery products, including meat, produce, natural and organics, deli and bakery, dairy, frozen foods, alcoholic and nonalcoholic beverages, floral and dry grocery, as well as consumables, such as health and beauty aids, baby products, household chemicals, paper goods, and pet supplies; and health and wellness products, which include pharmacy, optical services, clinical services, over-the-counter drugs, and other medical products. The company also provides electronics, cameras and supplies, photo processing services, cellular phones, cellular service plan contracts and prepaid service, movies, music, video games, and books; stationery, automotive, hardware and paint, sporting goods, and outdoor living and horticulture, as well as fabrics, crafts, and seasonal merchandise; apparel for women, girls, men, boys, and infants, as well as shoes, jewelry, and accessories; and home furnishings, housewares and small appliances, bedding, home decor, and toys. In addition, it offers fuel and financial services and related products, including money orders, prepaid cards, wire transfers, money transfers, check cashing, and bill payment. In addition, it offers brand name merchandise, including hardgoods, softgoods, and selected private-label items, such as Member's Mark. It operates 11,593 stores under 63 banners in 28 countries and e-commerce Websites in 11 countries. Wal-Mart Stores, Inc. was founded in 1945 and is headquartered in Bentonville, Arkansas.
(Summary) (Company) (Chart)
(Summary) (Company) (Chart)
| 15 October 2017 Price $86.62 1yr Target $85.49 Analysts 29 Dividend $2.04 Payout Ratio 49.02% 1yr Cap Gain -1.31% Yield 2.35% 1yr Tot Return 1.04% P/E 20.84 PEG 4.43 Beta 0.32 | EPS (ttm) $4.16 EPS next yr $4.62 Forward P/E 18.77 EPS next 5yr 4.70% 1yr Price Support $21.71 Market Cap $257.71 Bil Revenues $490.01 Bil Earnings $12.73 Bil Profit Margin 2.59% Quick Ratio 0.20 Current Ratio 0.80 Debt/Equity 0.62 | 1yr RevGR 0.77% 3yr RevGR 0.65% 5yr RevGR 1.70% 1yr EarnGR -4.16% 3yr EarnGR -4.24% 5yr EarnGR -0.63% 1yr DivGR 2.04% 3yr DivGR 2.06% 5yr DivGR 6.49% ROA 6.30% ROE 16.70% |
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