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Take a pass on Walmart stock, this portfolio manager says


WalmartConsumer stocks have had a bad first half of 2018, but don’t expect a turnaround from Walmart stocks (Walmart Stock Quote, Chart, News: NYSE:WMT) in the near future, says Jeff Parent of Castlemoore Inc., who argues that like the consumer sector itself WMT is still trending downwards.

This past week, Walmart held is annual shareholders meeting at the University of Arkansas, where company executives highlighted Walmart’s record of 15 straight months of US comparable sales growth along with significant increases in its online sales.

The company showcased some of the tech innovations it hopes will streamline its business, including robot inventory trackers and in-store drone assistants. Walmart’s Jetblack personal shopping program via text message was also on display.

But while the retailer continues to innovate, its future looks shakier than it has in a long time. There’s more focus on its stores in the US as compared to international business, which has not fared well, while its battle with e-commerce behemoth Amazon is ongoing.

“They have been failing, for the most part, globally,” says former Sears Canada CEO Mark Cohen. “They’re throwing in the towel in the UK, they’re out of Germany, they’re out of Korea and they’re struggling in Japan. They have the money and they have the intent, but I don’t think they have the strategy,” he says. “They are a store chasing a marketplace. Amazon is a marketplace.”

Since reaching an all-time high in January, WMT has been on a terrible skid, dropping almost a full one-quarter of its value in four months. Parent argues that from a technical point of view, there’s little to be optimistic about, either.

“It looks weak right now,” Parent told BNN Bloomberg. “You see that high in January look very positive and you saw that with some of the other consumer stocks. There was a gap in November and we’ve come down below that level. It’s still trending down. I wouldn’t be buying this right now.”

Other consumer stocks are faring just as poorly. Procter & Gamble (NYSE:PG), for example, is down 20 per cent year to date and Kraft Heinz (NASDAQ:KHC) is down 27 per cent.

“There’s some support [for WMT] at $79 so you’ll probably see another $4 loss here,” says Parent. “If it can stay there and find some support and then move a little bit higher, above $80 or $81, then I think you could buy it, but it still looks very much down right now, and certainly $87 would be a resistance point for this.”

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About The Author /

Jayson is a writer, researcher and educator with a PhD in political philosophy from the University of Ottawa. His interests range from bioethics and innovations in the health sciences to governance, social justice and the history of ideas.
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