New Trade for November 12th, 2020

Dow futures are pointing to a more than 200 point decline this morning after closing slightly lower in yesterday’s session, returning a portion of the 1,100 point rally from earlier in the week. S&P 500 futures also indicate a lower open while Nasdaq futures are green, but barely.  

Positive vaccine data inspired optimism earlier this week.  There is finally a light at the end of the tunnel. But the vaccine won’t be available to most people for months and right now the virus is spreading at an alarming rate in the U.S.. COVID-19 cases are rising in 49 states and some states are beginning to reimpose restrictions to curb the spread.  It’s unclear what this winter will bring as we await the vaccine.  Are we simply turning a corner, or is it time for a reality check?

Today we’re highlighting a company that will likely continue to benefit from stay-at-home culture, even more so if states bring back restrictions.  But this company also stands to benefit as the tides change, whenever that will be.  

Electronics, toys, cleaning supplies and just about everything else Walmart (WMT) sells is in high demand in the COVID era — and fortunately, Walmart spent the years prior to the crisis building out its e-commerce arm.  In Q2 Walmart’s e-commerce sales surged 97%.  That growth should continue as winter approaches and COVID case numbers surge.  But what about after the vaccine’s arrival, when the dust has settled?

The harsh reality is that many of the weaker retailers that have been limping along for years, kept alive by cheap credit, won’t survive this recession.  Others will need to consolidate and reduce store count.  Some of their losses will be Walmart’s gain.  In true Darwinian natural selection, only the strong survive.  And other than perhaps Amazon, no retailer has proven to be fitter than Walmart.  

WMT has a $419.34 market cap, a trailing 12-month P/E of 23.59 and a 1.46% dividend yield.