Walmart Inc (NYSE: WMT) is a buy even though retail sales came in flat for September, says Tim Seymour. He’s the Founder of Seymour Asset Management.
Walmart generates more sales from groceries
Retail sales, he noted, were weighed because consumers were cutting back on “discretionary” spending.
Seymour doesn’t see that as much of a threat to Walmart, though, since it’s primarily a food retailer. On CNBC’s “The Exchange”, he said:
Buy companies that have great balance sheets and have over time increased their payout ratios. Companies that have shown they continue to watch the balance sheet and have debt to equity levels either around two or lower. Walmart comes in there.
His constructive outlook is in line with Wall Street that also recommends you buy Walmart stock because it has another 15% upside from here.
Walmart pays a dividend yield of 1.72% though.
Walmart is well-positioned for inflation
Generating a bigger chunk of its revenue from “staples”, Seymour added, makes the Walmart stock a particularly great pick after consumer prices were recently reported up 0.4% for September.
The Bentonville-headquartered multinational retailer is expected to report its Q3 results in mid-November. Consensus is for it to earn $1.31 this quarter down from the year-ago $1.45.
Last month, Walmart also partnered with Roblox to see if stores in the metaverse could help boost its real-world sales. Seymour is also bullish on peer Target Corporation (NYSE: TGT).
I think Target’s metrics are even more impressive and they’ve been growing their dividend about 25% over the last couple of years.
“TGT” is down 40% for the year.
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