They are two giants in retail and, in their own way, are wreaking havoc among their competitors.
Of course we're talking about Amazon and Wal-Mart.
When Toys "R" Us announced that its sales declined 7% and it lost over $1 billion last year, many looked to Wal-Mart and Amazon as one of the leading causes for the decline. Once the nation's top retailer, Toys "R" Us was once Amazon's exclusive toy-seller. After a bitter dispute, Toys "R" Us now competes with Amazon online. Meanwhile, Wal-Mart is now the nation's largest toy seller.
With Wal-Mart and Amazon now two of the biggest retail titans, which one is the better buy for investors?
"It's a stark choice because they're not very similar, really even though they're both in the retailing realm," says Steve Cortes, founder of Veracruz TJM. "Amazon is like a race car, it's like a Ferrari. And Wal-Mart, basically, is a very dependable station wagon. Right now, though, I think boring is beautiful and I prefer Wal-Mart."
Cortes sees recent trouble for momentum stocks as big reason investors should bet on Wal-Mart over Amazon.
"For the near-term, momentum stocks are trading incredibly poorly, particularly in recent days… Facebook, Twitter, names like that," says Cortes. "Amazon tends to trade with that crowd."
Amazon is down 6% so far this month, though Wal-Mart is up 2%.
"For the first time in a long time, Wal-Mart is outperforming Amazon," says Cortes. "Boring is beautiful here. Go with stability. Forget about the race car and go with the dependable station wagon for a soccer mom and that's Wal-Mart."
Steven Pytlar, Chief Equity Strategist at Prime Executions, sees the technicals as bullish on Wal-Mart for the near-term.
"The chart of Wal-Mart has potentially broken a downtrend that was in effect since October," says Pytlar, who sees a $76 support level in the share price with another 5% upside. "If we just simply take the normal technical projection of that little basing process we see there could it get us back to about $80 in the near-term."
To see the full discussion on Wal-Mart with Cortes on the fundamentals and Pytlar on the technicals, watch the video above.
- Consumer Discretionary