114.72 0.00 (0.00%)
After hours: 7:00PM EDT
|Bid||114.82 x 1200|
|Ask||114.98 x 800|
|Day's Range||113.74 - 114.78|
|52 Week Range||85.78 - 115.49|
|Beta (3Y Monthly)||0.66|
|PE Ratio (TTM)||40.14|
|Earnings Date||Aug 15, 2019|
|Forward Dividend & Yield||2.12 (1.85%)|
|1y Target Est||110.89|
Walmart de Mexico, Mexico's largest retailer, on Thursday reported a nearly 10% jump in second-quarter net profit, beating expectations as higher traffic partly attributed to Mother's Day and the summer season boosted sales. Sales at Mexican stores that have been open at least a year rose over 5%, signaling healthy performance for parent company Walmart Inc's largest overseas market by store count. Walmart brand stores in Mexico saw "robust" growth thanks to discounts tied to the summer vacation season, Mother's Day and Father's Day, the retailer said.
Against the backdrop of a stock market that is firing on all cylinders and surging to fresh all time highs, Walmart (NYSE:WMT) stock has likewise been firing on all cylinders. In 2019, Walmart stock price is up a whopping 23%.Source: Shutterstock That's a big number. To put that 23% gain through a bit more than six and a half months in perspective, if Walmart stock price was flat for the rest of the year and closed 2019 up 23%, 2019 would still be the stock's second best calendar year performance this century. * 7 Stocks Top Investors Are Buying Now The sizzling performance from WMT stock comes despite the broader retail sector having struggled the whole year; the SPDR S&P Retail ETF (NYSEARCA:XRT) is up just 4% year-to-date. Meanwhile, Walmart stock is trading at a decade-high valuation of 23 times analysts' average forward earnings estimate. Thus, one could very reasonably argue that retail stocks' woes and an extended valuation will catch up to Walmart stock in the back half of 2019, and ultimately cause WMT stock to lose its gains from the first half of the year.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBut this thesis is flawed for three major reasons. Those three huge reasons are as follows:* Market and consumer economic fundamentals remain healthy, and support continued asset-price appreciation and healthy consumer spending for the foreseeable future.* Walmart has separated itself from the rest of the retail pack, and will continue to post better-than-average numbers for the foreseeable future.* Given the favorable backdrop and the company's enhanced growth trajectory, WMT stock warrants its presently inflated valuation.Consequently, I think the outperformance of Walmart stock will persist into the end of the year. I further believe that when all is said and done, Walmart stock price will be around $120 at the end of the year. The Macro Fundamentals Are FavorableThe macro fundamentals supporting not just WMT stock, but all consumer-facing stocks, are healthy today and look poised to remain healthy for the foreseeable future.Financial markets are heavily influenced by low real interest rates. As interest rates have crept lower in 2019, that has allowed equity yields to move lower, too, and stocks have benefited from significant multiple expansion in 2019. This dynamic will persist because the Fed now appears to be on a rate-cutting cycle which could last for several months. As long as this rate-cutting cycle remains in play, rates will remain low, and the market environment will remain risk-on and favorable for stocks.On the economic side, all the "slowing growth" that everyone is talking about is happening on the manufacturing side (we appear to be heading into a manufacturing recession, mostly thanks to U.S.-China trade tensions). On the consumer side, though, everything remains fine. Unemployment rates are at record lows. Wage gains are running at decade-high levels. The savings rate remains high. Household debt isn't a problem.Interest rates are low. Retail sales numbers have been strong. All of these favorable conditions should remain in play with the Fed now cutting rates, which should juice the economy and provide even more firepower to an already healthy U.S. consumer.So market and economic conditions are presently very healthy for consumer-facing names like WMT stock, and should remain healthy for the foreseeable future. Walmart Has Separated Itself From The Retail PackAlthough market and economic conditions have been healthy for consumer-facing stocks in 2019, certain consumer-facing stocks - namely, most retail stocks - have continued to struggle.That's because a majority of retailers are still struggling to keep up with the times. Many of them are attached to malls, which have continued to suffer from non-cyclical traffic declines. Many of them haven't built robust e-commerce businesses. Indeed, some of them don't even have an omni-channel presence. Most of them are also niche, don't have the resources to compete with Amazon (NASDAQ:AMZN), and have failed to invest meaningfully in their businesses.Walmart does not fall into any of those categories.Walmart is an off-mall retailer. It has a huge e-commerce business that is growing at a 30%-plus pace. WMT has a big, rapidly expanding omni-channel business that includes pick-up in-store and delivery. The company is not niche; Walmart has basically become an all-in-one retailer where consumers can find everything from electronics to clothes to groceries - and it has more than enough resources to compete with anyone in the world. It's taking those resources, and investing them back into its business through in-store remodels, enhanced web stores, and improved logistics.All in all, Walmart has separated itself from the retail pack. This separation will enable Walmart to succeed going forward, even as other retailers may struggle. Walmart Stock Is Worthy of Its Current ValuationWMT stock presently trades at 23-times forward earnings. That is the biggest forward earnings multiple this stock has received over the past decade. Indeed, the current 23-forward multiple represents a 30%-plus premium to the stock's five year average forward multiple of 17.5.From this perspective, one could very reasonably argue that WMT stock is overvalued.But that argument would misunderstand why investors have been willing to pay 23-times forward earnings for WMT stock today. The Walmart of today is much better than the Walmart of yesterday. Until recent years, Walmart had been a low-growth company with sluggish traffic trends, eroding margins, and strong competitive pressures from e-commerce. Today, though, Walmart is a faster growing company with healthy traffic trends, improving margins, and easing competitive pressures. The company is also innovating at a rapid pace, giving investors confidence that today's improved trends will persist over the next several years.Given these points, I reiterate that WMT stock is on track to close 2019 around $120, based on the idea that WMT's revenue is poised to grow steadily, while it has healthy margin drivers and strong profit growth potential over the next few years. The Bottom Line on WMT StockWalmart stock is up by a large amount this year. But its rally isn't over. Over the course of the next six months, the market and economic environments will remain favorable, Walmart's numbers will remain healthy, and WMT stock will continue to benefit from supercharged investor demand. This trio of tailwinds will ultimately propel Walmart stock close to $120 by the end of this year.As of this writing, Luke Lango was long WMT and AMZN. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Stocks Top Investors Are Buying Now * The 10 Best Cryptocurrencies to Keep on Your Radar * 7 Marijuana Penny Stocks That Could Triple (But You Won't Make Money) The post The 3 Big Reasons to Stick With Walmart Stock in 2019 appeared first on InvestorPlace.
To put it bluntly, retail is a bloodbath these days. Consumers have gotten fickler than ever, which has created an interesting environment for many retail stocks to operate in.Today, people want their goods when they want it and how they want it. This means that both physical stores and digital commerce need to be blended. Two-day and even one-day shipping is now the norm, while online ordering and pick-up have quickly become a default option for many consumers.Needless to say, a lot of retail stocks have buckled under this pressure. Store closures and bankruptcies dot the sector.InvestorPlace - Stock Market News, Stock Advice & Trading TipsHowever, not all retail stocks are being tossed to the wolves. In fact, several are getting it right. That includes the right tech and consumer experiences to compete in the new omnichannel paradigm. These winners are proving that investors don't have to ignore the sector completely, but they do have to be selective. Choose wrong and you could be staring at plenty of empty storefronts. * 7 Stocks Top Investors Are Buying Now Which retailers are getting the job done in omnichannel? Here are five retail chains that will be winners in the years ahead. Williams-Sonoma (WSM)When being a "foodie" and collecting kitchen gadgets weren't as popular as they are today, Williams-Sonoma (NYSE:WSM) was really the only game in town for it. If you wanted to find new kitchen appliances, high-end imported foods, and other now-common kitchen items, you had to go to WSM. Because of this, the retailer has built up a fanatical fanbase of customers.The best part is this fanbase tends to be older and more affluent than typical bargain shoppers. After all, if you're willing to drop nearly $12,000 on an espresso machine, you have some cash to spend. And they tend to transfer their love of the brand down to their children when they finally become adults.The same could be said for its other major brands like Pottery Barn and West Elm for home furnishings. WSM has managed to create a cohort of wealthy customers that are willing to shop there first before anywhere else. This gives it a monster edge over many other retail stocks.Williams-Sonoma has been an earnings machine -- especially in the world of omnichannel. It has been able to get people into its stores for demos and product help while making plenty of revenues online. Sales have grown by an annual rate of 6% per year since 2010, while earnings have grown 11% per year over the same time. And it has been sharing the wealth via a growing dividend. Today, WSM yields almost 3%.All in all, WSM stock has all the right ingredients to keep winning in the new retailing world. Five Below (FIVE)Dollar stores have been incredibly resilient in the face of rising online and omnichannel shopping. But dollar-store Five Below (NASDAQ:FIVE) isn't like your local Dollar General (NYSE:DG). The product is very different. That is, it's geared towards kids, tweens, and even college students. You're looking at toys, games, cheap tech gear and beauty items. Moreover, much of the product mix shifts as the season's change -- which adds a "treasure hunt" aspect to their locations and necessitates repeat customers.And customers are coming back in a big way.Because of its operating model and low-cost of goods, the funky dollar store has managed to turn sales into actual profits. New stores have an average payback time of just one year, while profits have compounded by over 32% per year since its IPO. That's torrid growth considering this is a budget retailer. And FIVE has managed to do all of this without debt. * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip Given its focus on tweens as well as on-trend goods, the retail stock has a unique niche that can't be tackled by many other rivals. For investors, this position offers plenty of opportunities to grow into the future. Kroger (KR)The grocery business is pretty cutthroat to begin with. Margins tend to be thin, consumers fickle. For many retail stocks that have operated in the sector, bankruptcy has been a forgone conclusion. This is especially true now that e-commerce giants like Amazon (NASDAQ:AMZN) have entered the market.But Kroger (NYSE:KR) seems to be getting it right, albeit slowly. The firm has been able to leverage its scale as the nation's largest supermarket chain to make a serious go at the new world of omnichannel.This includes unveiling new order ahead options for its products, apps, a big partnership with Instacart, and other tech-oriented consumer experience products. Today, KR has more than 1,685 stores that offer order pickup locations as well as over 2,125 delivery locations for its groceries. That covers about 93% of its customers.These efforts have helped grow digital sales by more than 42% during the first quarter of this year. Meanwhile, Kroger has been copying Amazon and Walmart's (NYSE:WMT) playbooks and moving into so-called alternative revenue streams. This includes media and advertising, customer data, and other real estate investments. KR is on track to start producing some significant revenues this year. So far it crushed its latest earnings estimates and was able to increase its dividend by a whopping 14%.Though KR's moves are working at a slow pace, the grocery giant could be an interesting value among retail stocks. KR is getting it right, it's just taking time. At least you get paid a hefty dividend while you wait. Home Depot (HD)What housing crisis?That's the mantra for home improvement giant Home Depot (NYSE:HD). The retailer continues to see rising sales and demand for various home improvement products and services. And the reason is simple: HD has started to seriously court the next generation of homeowners.Thanks to generally low interest rates and looser lending standards, Gen X and Millennials are finally able to buy homes. But they are not buying move-in ready McMansions. They're buying fixer-uppers that require plenty of sweat equity, which means plenty of trips to Home Depot. Moreover, HD has courted these customers with new omnichannel operations, mobile apps, and customer service experiences.It's working in a big way. Last year, HD pulled in record profits and the streak is continuing this year. Sales for the first quarter of this year increased 5.7% to clock in at $26.4 billion. Earnings per share managed to jump by over 9%. Its continued moves into omnichannel have certainly helped on this front.With the continued revenue and EPS gains, HD has rewarded shareholders in a big way. Thanks to improved results, Home Depot unveiled a new monster $15 billion buyback program and increased its dividend by an insane 32%. And with interest rates set to drop further, more people could be able to buy a home. * 10 Best Dividend Stocks to Buy for the Rest of 2019 and Beyond All in all, HD's outlook could be one of the rosiest of all retail stocks. O'Reilly Automotive (ORLY)Grease monkeys and gearheads could give a flip about online and e-commerce sales. Both classic and modern cars require plenty of knowledge and specialized parts, many of which can only be found at your local auto parts store. Moreover, several maintenance issues require special disposal of waste. You can't just chuck old motor oil down the drain. That necessitates a trip to a physical location.All of this could help explain why O'Reilly Automotive (NASDAQ:ORLY) crushed the market last year.The retail stock has seen plenty of steady single and low double-digit earnings increases over the last few years as the economy continues to expand and miles driven increase. As long as the economy continues to clip at a steady pace, ORLY should be able to get the growth going.Another reason for its success is its management team. The stock is packed with insiders and family ownership. Because of this high ownership, management often takes more long-term views of investments and decisions. Yes, it's about improving quarter to quarter, but its more about building the company over the decades. And ORLY has done just that. During the recession, a decision to expand made the firm the giant it is today.With new moves to court professional garages and a $1 billion buyback now under its belt, ORLY continues to make the right moves in the new retail environment.At the time of writing, Aaron Levitt had a long position in AMZN. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Stocks Top Investors Are Buying Now * The 10 Best Cryptocurrencies to Keep on Your Radar * 7 Marijuana Penny Stocks That Could Triple (But You Won't Make Money) The post 5 Retail Stocks to Buy That Are Getting It Done appeared first on InvestorPlace.
The U.S. House of Representatives on Thursday passed a legislation to raise the federal minimum wage to $15 an hour by October 2025 - a big win for American workers and labor groups - even as the bill passing a Republican-controlled Senate remain unlikely. The bill increases entry-level wages for millions of American workers from the current $7.25 an hour - a level that has remained unchanged since 2009.
Walmart (NYSE:WMT) stock has taken off. Just since the beginning of June, the Walmart stock price has increased over 13%. Yet there's been very little news to support the rally of Walmart stock.Source: Shutterstock Indeed, the biggest piece of news over that period hardly seems bullish. As James Brumley noted last week, Recode reported that Walmart's e-commerce businesses are losing $1 billion a year. * 7 Stocks Top Investors Are Buying Now But that counterintuitively could be good news for Walmart stock. Those losses suggest all of the company's businesses excluding e-commerce are more profitable than its reported figures imply. A $1 billion e-commerce operating loss, at the guided 27% tax rate, suggests a roughly 26 cents per share headwind to earnings. The hit likely is even higher, given that management has noted that much of the losses are coming from India's Flipkart, where tax rates and tax deductions for losses are lower.InvestorPlace - Stock Market News, Stock Advice & Trading TipsAs a result, the impact of e-commerce losses on the company's EPS might be closer to 30 cents per share or higher. So Walmart's EPS, excluding its operating loss from e-commerce, would be closer to $5.15 this year rather than the current consensus estimate of $4.83.The problem at this point is that even that $5+ figure still leaves Walmart stock trading at 22.2 times its earnings, which is an awfully hefty valuation. That's a notable premium to the mid-teen P/E multiples that have historically been applied to Walmart stock.WMT stock isn't the only name that's benefited from that type of multiple expansion, and it's not the only one that's beset with these types of valuation questions. Indeed, in a market now at its all-time highs, there is no shortage of stocks in sectors like software and e-commerce that look too expensive.But Walmart stock highlights a growing trend outside tech as well. Right now, the market will seemingly pay any price for quality. The question is if, or when, that trend will break. The Obviously Expensive MarketOutside of the dot-com boom nearly two decades ago, it's difficult to remember a time when more stocks looked outrageously expensive. Most of the obvious choices - as is usually the case - are in tech, but not all.Beyond Meat (NASDAQ:BYND), for instance, trades at 25 times analysts' average estimate of its 2020 revenue. It's risen a stunning 153% from its initial close, on top of a 163% increase on its first day of trading.Shopify (NYSE:SHOP) has gained 134% so far this year, and trades at well over 20 times its 2019 revenue guidance. Another e-commerce play, Square (NYSE:SQ), isn't cheap, either.Snap (NYSE:SNAP) is unprofitable and valued at $20 billion. MongoDB (NASDAQ:MDB) has generated $300 million in sales over the past 12 months and has a market capitalization of over $8 billion.Those are just a few examples. There are dozens of stocks trading at over ten times revenue, even excluding early-stage biotech and pharmaceutical companies, which have little or no sales. Earnings multiples of 100+ aren't uncommon right now.Just a quick look around the market indicates that there at least are areas in which valuation doesn't seem to matter. And as good as these companies might be, it would appear to take something close to perfection for investors to get reasonable returns after paying these prices. That sounds a bit like a bubble, as many observers have argued. Walmart Stock and the Price of QualityBut somewhat quietly, similar valuation questions have risen among older, lower-growth names. Walmart's earnings multiples are the highest they've been since the financial crisis, by far. Again, this is a stock that for most of this decade has traded between 14 and 17 times its earnings.WMT stock isn't the only one. Microsoft (NASDAQ:MSFT) is targeting EPS growth in the range of 10% a year at best and now trades at something like 26 times next year's average EPS estimate. That multiple, too, seems to be the highest assigned the stock since the middle of the last decade, when the company's growth profile was very different.Walmart supplier Procter & Gamble (NYSE:PG) has executed an impressive turnaround. But it trades at 24 times forward earnings while analysts expect 6% profit growth next year. The shares of another consumer giant, Coca-Cola (NYSE:KO), tumbled after KO reported ugly Q4 earnings in February. Coke's pre-tax profits have declined over the past six years. Soda consumption is in the midst of a long-term decline, particularly in the U.S. Naturally, KO stock, too, is trading at an all-time high, with investors paying 23 times the average forward earnings estimate for it.Investors are paying whatever it takes right now to buy quality or something close to it. McDonald's (NYSE:MCD), Visa (NYSE:V) and Mastercard (NYSE:MA) all continue to soar and all sit at all-time highs. Even Home Depot (NYSE:HD), whose multiples according to market theory, should be dropping this late in the macroeconomic cycle, is following the trend.It's easy to look at the likes of BYND and SHOP and see a market "bubble," or something close to it, based on the multiples. But it's not just growth stocks that are receiving historically high - and questionable - valuations. What This Means for Walmart Stock Price - and the MarketThe question is whether these valuations can hold. And that question likely depends in part on a key factor: interest rates. Expectations are rising for a Federal Reserve rate cut (or two) this year. That puts investors in quite a bind.How, exactly, can an investor get returns? The ten-year Treasury bond yields a paltry 2.125%, with significant duration risk. (Duration risk simply means that if interest rates rise over that ten-year period, an investor won't be able to sell the bond at par, leaving her with the choice of keeping below-market rates or taking a loss.) Savings accounts and CDs (certificates of deposit) pay even less.Emerging market stocks, including Chinese issues, have significant risk. Europe's growth is meager. Even among U.S. issues, historically "defensive" sectors - notably healthcare and certain kinds of real estate - aren't as safe as they used to be.In that environment, choosing quality and ignoring valuation makes some kind of sense. And those of us investors (myself included) who have been balking at valuations for several years now have missed out on gains by the likes of MSFT and Walmart stock, let alone the 100%+ gains that stocks like SNAP, SHOP, and BYND have posted.But, again, the question is whether this phenomenon can continue. Bearish investors would argue that, at some point, valuations have to matter. Valuations have to come down. And Walmart stock would seem to be a prime candidate for a valuation cut.After all, WMT is facing real challenges now. Amazon.com (NASDAQ:AMZN) is a formidable competitor. The Sam's Club concept has stalled out. Walmart's international earnings have declined for some time, though the stronger dollar is an issue. And WMT's earnings growth remains meager.It doesn't seem like Walmart stock should be valued at 20+ times its earnings, but the valuation of WMT stock may have less to do with its business than many investors believe.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Stocks Top Investors Are Buying Now * The 10 Best Cryptocurrencies to Keep on Your Radar * 7 Marijuana Penny Stocks That Could Triple (But You Won't Make Money) The post Why Wall Street Bears Should Be Watching Walmart Stock Closely appeared first on InvestorPlace.
If you've been paying attention, things haven't been going well for Facebook (NASDAQ:FB). Facebook stock can't seem to get any traction between scandals.Source: Shutterstock The FANG member had hoped that its new cryptocurrency- Libra- would be a game-changer. However, those operations have only left regulators even more frightened and could be D.O.A. before they really get started.At the same time, FB is now being forced to write a $5 billion check to the FTC following the Cambridge Analytica scandal.InvestorPlace - Stock Market News, Stock Advice & Trading TipsAdd in general public distrust and a growing deleteFacebook movement, and it's been tough to be FB stock investor. So, any good news on the Facebook front would be a welcome sign. * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip And they just may get it on the virtual reality front.FB has long been a bit player in VR But these days, the tech firm is starting to gain some serious traction and score a series of big deals to usher in a new wave of virtual reality gaming. While it won't take the sting of a potential $5 billion fine away, it will help the medicine go down. In the end, VR gaming could be the next wave and diversified earnings stream that Facebook stock needs. Oculus and Facebook StockOne of the cool things about how modern tech firms operate is that can use the cash flows from their main businesses to sort of fund hobbies. Google (NASDAQ:GOOG) uses search revenues to fund Waymo and autonomous cars.Amazon (NASDAQ:AMZN) uses cash-flow heavy cloud operations to pay for its forays into new delivery options. What's great is that these hobby operations can (and often do) turn into big money makers for their owners.Facebook is no different in this regard. Its hobby happens to be virtual reality. When it bought Oculus back for $2 billion back in 2014, modern V.R. was in its infancy. Oculus didn't actually have a formal product and FB had no real direction for the division. And in fact, Oculus has been a point of contention within Facebook and has seen plenty of high-profile leadership departures.But these days, the hobby may be paying off. Last year, the firms released the tethered Oculus Rift headset and this year, it followed up with wireless Quest. The $399 fully wireless headset has turned out to be a smash hit for FB. So far, sales of the unit have grown more than 54% over 2018's numbers. That's managed to crush Facebook's own internal sales projections in a big way.The real end-user of the device has been surprising as well. So far, the bulk of sales has been for corporate training. Before last holiday season, Walmart (NYSE:WMT) began using the Oculus Go virtual reality headsets to train associates on "new technology, soft skills like empathy and customer service, and compliance." Here's What's Next for Facebook StockUsing VR for training has a long runway and will provide plenty of growth for FB and Oculus over the long haul. But the obvious play for the VR is just getting started and Facebook recently announced some big plans for the division.Virtually reality is made for gaming and the promise of using the tech for this purpose has been signaled since really the 1980s. Facebook has already seen some moderate success with games on the Oculus. But lately, Facebook has started to step up its partnerships and offerings in a big way.According to The Information, Facebook has signed exclusive deals for VR versions of immensely popular games "Assassin's Creed" and "Tom Clancy's Splinter Cell." Here, FB gets the only access to them for VR consoles.Given the immersion factor of these games, it's a huge coup for the Oculus platform. It also highlights, how Facebook's VR units could be sharing space with your Microsoft (NASDAQ:MSFT) Xbox in the near future. The Information also reports that Zuckerberg is looking into buying gaming studios outright in order to create IP and games exclusively for Oculus.With a price point comparable to other gaming units, the move into Oculus-exclusive games is great for the future. By buying its own studios and landing new games, Facebook is setting itself up to score more users, hardware sales and content revenues down the road.While VR revenues are a drop in FB's bucket today, the chance to bring VR to even a sliver more of Facebook's 2.38 billion monthly active users is certainly tantalizing. Zuckerberg has a goal of getting over a billion people into Facebook's VR operations. Gaming will help on that lofty goal. The Bottom Line on Facebook StockFor investors, the real moves in VR and the expansion of its gaming partnerships is a very bullish sign. Given that some of its other moves and classic business lines are coming under intense public and governmental scrutiny, gaming is a relatively safe bet that can generate some serious long-term revenues for the firm. And given its foothold as the only VR game in town, it's a huge advantage over other rivals.The best part is that this revenue stream will be far away from the problems of crypto and data mining.For investors, that could be a great long-term win for Facebook stock. In the end, it's showing that Facebook is taking its future seriously and that Oculus is turning into less of a hobby business and more into a serious money-maker.Disclosure: At the time of writing Aaron Levitt held a long position in AMZN stock. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip * 7 Services Stocks to Buy for the Rest of 2019 * 6 Stocks to Buy and 1 to Sell Based on Insider Trading The post A Healthy VR Obsession Could Finally Start Paying off for Facebook Stock appeared first on InvestorPlace.
St. Louis Park officials aim to lay the groundwork for mixed-use redevelopment of a 13.5-acre commercial site near a future light rail station.
A clearance sale is one of the great miracles of business, one Amazon (NASDAQ:AMZN) shared with small merchants on Prime Day.Source: Shutterstock Merchandise is usually sold to retailers on "60-day net" terms. That means they have 60 days to pay for it. Big box retailers like Walmart (NYSE:WMT) destroyed small retailers by turning goods over in two weeks, selling goods before they bought them.Prime Day is a clearance sale, where AMZN expects to bring in about $5 billion during what would normally be a slack period.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip That's why clearance sales are held in the summer. They create excitement when stores, both online and off, would otherwise be empty. Competitor Walmart Joins the FunFour of Amazon's 10 biggest sellers this year were electronics products from last season. Basically, stuff it needed to move to make room for new stuff.Thanks to the hype Amazon has created around this "event," other big retailers are able to do the same thing.Walmart was able to move many of the same slow-selling products Amazon was selling, along with mattresses, tents, and electronics.Best Buy (NYSE:BBY) moved speakers, monitors, and robot vacuums. Gamestop (NYSE:GME) was able to push out old Nintendo equipment. Wayfair (NYSE:W) got rid of outdoor grills and patio furniture before the season changes. Even eBay (NASDAQ:EBAY) was able to unload old drones, printers, and cameras.For those seeking a lesson in all of this, note how many of these stores, including Amazon, were offering special deals on the Apple (NASDAQ:AAPL) Watch.By turning a mid-summer clearance into a holiday, Amazon was able to clear the decks for itself and for others before they must commit to buying the holiday merchandise that makes for profits. Prime Day also provided a stern test for Amazon's fulfillment system, its warehouses, and delivery people, before competition heats up in the fall. The Real Amazon ModelThe success of Prime Day comes as Amazon is under government pressure to change its current sales model, which emphasizes third parties, eliminating the inventory risk which makes clearance sales necessary.An appeals court ruling that makes Amazon responsible for products it never owned, combined with a European agreement forcing it into better treatment of third party merchants, could induce it to take back some inventory risk.So could the rising cost of counterfeits and Congressional complaints that Amazon's off-brand merchandise is unfair to third parties.Amazon's Asian rival, Alibaba (NASDAQ:BABA), has been steadily increasing its inventory risk, while Amazon has reduced its own to make money on fulfillment. The Amazon purchase of Whole Foods two years ago has yet to pay off, while Alibaba has been buying entire shopping malls to gain more control over customers.A change of direction by AMZN could devastate small businesses. About 58% of Amazon's retail sales are on behalf of third parties. 73% of them are by small businesses with five or fewer employees. Such small businesses are also those most likely to be selling counterfeit goods. Amazon has little choice in cracking down. The Bottom Line for AMZN StockAmazon is a retail ecosystem. It lets small companies compete directly with Walmart, Target (NYSE:TGT) and other big box shops, setting up online shops, shipping through automated warehouses, and getting the best deals on bookkeeping and delivery.Amazon is proud of these merchants, giving them access to its entire set-up, including analytics tools.As the sun sets on another Prime Day, with courts and legislators closing in to call Amazon a monopoly, these small merchants are its secret weapon. They should no longer be a secret to Amazon shareholders.Dana Blankenhorn is a financial and technology journalist. He is the author of a new environmental story, Bridget O'Flynn and the Bear, available now at the Amazon Kindle store. Write him at email@example.com or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in AMZN and AAPL. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip * 7 Services Stocks to Buy for the Rest of 2019 * 6 Stocks to Buy and 1 to Sell Based on Insider Trading The post Amazon Prime Dayas Secret Weapon appeared first on InvestorPlace.
EBay Inc beat Wall Street estimates for quarterly revenue and profit on Wednesday, as a multi-year effort to make its platforms easier to use attracted more customers, sending its shares up 5%. EBay, facing rising competition from Amazon.com Inc and Walmart Inc, has been focusing on its emerging businesses such as advertising and payments. San Jose, California-based eBay announced a review of its StubHub and eBay Classifieds businesses in March and said it would name two new directors to its board as part of an agreement to ease pressure on the board from activist investors.
EBAY has displayed a sharp rally so far in 2019, surging 42.5% since January 1st, far outperforming the e-commerce sector. Analysts have been increasing long term earnings estimates, propelling EBAY into a Zacks Rank 1 (Strong Buy).
EBay Inc. was added to the Zacks Rank 1 (Strong Buy) list on Tuesday, with the company set to report its quarterly earnings results Wednesday after the market closes. YTD, EBAY is up 42.5%.
With its 30.5 trailing P/E ratio and its $1 trillion market cap, Microsoft (NASDAQ:MSFT) stock price largely reflects its current two main growth engines: its cloud business and its software-as-a-service offerings. Consequently, investors should not expect MSFT stock to rally tremendously when it reports its fiscal fourth-quarter results after the market closes on Thursday.Source: Shutterstock Still, the growth of MSFT's cloud business and its SaaS offerings could modestly surpass average expectations, triggering a small increase in MSFT stock.And over the medium term,MSFT has multiple, strong potential catalysts that could push MSFT stock much higher. Microsoft's Cloud Revenue Could Beat Average EstimatesMicrosoft's revenue from its cloud business, Azure, soared 73% year-over-year in the first quarter, and the company gained share in the still rapidly expanding cloud market in calendar Q1.InvestorPlace - Stock Market News, Stock Advice & Trading TipsMSFT has two important drivers in the cloud market. * 4 Retail Stocks to Buy in Time for the Back-to-School Rush First, a number of foreign countries are in the early stages of adopting the cloud, giving Azure a huge new growth engine. Secondly, brick-and-mortar retailers are expanding their e-commerce businesses and taking e-commerce market share from Amazon (NASDAQ:AMZN), which has the world's top cloud business. Given that situation, more and more of these retailers may decide to emulate Walmart (NYSE: WMT) and use Azure for their cloud needs.Most analysts likely underestimated the combined strength of these trends, so Microsoft's cloud revenue may surpass analysts' consensus estimates, enabling the company's overall results to come in ahead of average estimates, boosting Microsoft stock. The Valuation of Microsoft Stock Is Already ElevatedBut, as noted earlier, the valuation and market cap of MSFT stock are rather elevated. In fact, Microsoft stock has the highest market cap of any publicly traded company, narrowly beating out Apple (NASDAQ:AAPL) and Amazon. As a result, a great deal of cloud growth is likely already baked into MSFT stock.In fact, just last week, Cowen analyst Nick Yako initiated coverage of Microsoft stock with an Outperform rating, predicting that the combined revenue generated by Azure and the company's SaaS business, Office 365 could rise by $100 billion in five years. He added that the company's revenue and earnings could easily grow by at least 10% annually over the next five years. But despite his optimism, Yako set a $150 price target on MSFT stock, meaning that he expects Microsoft stock to climb less than 10% over the next year.That's another indication that, even if MSFT reports stronger than expected Q4 results, MSFT stock probably won't rise much. Microsoft Stock Has Other Potential Positive CatalystsDuring next year's holiday season, Microsoft will release its first completely new video-game console since 2013. According to Techradar, the new console will be "the most powerful console" and "is meant to be four times as powerful" as MSFT's current Xbox One X console. Other reports indicate that the new console will be entirely cloud-based. If it also features virtual reality and/or augmented reality and highly captivating games, it could move the needle for MSFT stock.Additionally, over the last two years, Microsoft has stepped up its investment in Teams, its"collaboration software," creating a battle with Slack (NYSE:WORK), which also offers collaboration software. Some say that companies will eventually use such software instead of e-mail. If that forecast proves to be accurate, Teams could spur rapidly accelerating adoption of Office 365, creating another positive catalyst for MSFT stock.Finally, Microsoft is being considered for a a $10 billion cloud deal with the Department of Defense. The long-delayed deal is slated to be awarded late next month. After a judge recently dismissed Oracle's (NYSE:ORCL) lawsuit related to the contract, there's a good chance that the deal could actually be announced next month or soon thereafter. Keep in mind that Microsoft is up against Amazon. But in light of President Trump's open disdain for AMZN, I certainly wouldn't bet against MSFT winning the contract. * 8 Penny Stocks That Have Fallen From Grace The Bottom Line on MSFT StockMicrosoft's Q4 results could beat expectations, but given the high valuation of Microsoft stock, they probably won't cause the shares to climb too much. Positive catalysts, however, could boost MSFT stock over the longer term. Given these positive catalysts and the excellent performance of MSFT under its current CEO, Satya Nadella, longer-term investors should buy MSFT stock on dips.As of this writing, the author did not own shares of any of the aforementioned companies. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip * 7 Services Stocks to Buy for the Rest of 2019 * 6 Stocks to Buy and 1 to Sell Based on Insider Trading The post Microsoft Stock Probably Won't Surge on Earnings -- Buy It Anyway appeared first on InvestorPlace.
(Bloomberg) -- Amazon.com Inc. captured the bulk of online spending during the first 24 hours of its Prime Day event, showing that customers continue to flock to the site for deals despite competing discounts offered by Walmart Inc., EBay Inc. and Best Buy.Online shoppers spent more than 10 times as much money on Amazon in the first day than they did on Walmart and EBay combined, according to e-commerce research company Edison Trends. Sales in the first 24 hours were up 53% compared to the same period of last year’s Prime Day, Edison said.Amazon on Wednesday said sales over the two days this year surpassed those on Black Friday and Cyber Monday combined. The Seattle-based company launched Prime Day in 2015 to lure new Prime members, who pay monthly or annual fees for shipping discounts and other perks. Prime members spend more than twice as much on the site each year than non-Prime members, according to Consumer Intelligence Research Partners. That makes a day of discounts worth it for Amazon to draw more spending through the year, especially in the busy holiday season.Amazon said it added more new Prime members on July 15 than any previous day, and almost as many on July 16 – making these the two biggest days ever for member signups.Despite a rough start, when critics said Prime Day resembled a rummage sale featuring discounts on obscure products, the event has evolved into an international shopping phenomenon. Amazon is using it to lure more Prime members internationally, including in key markets like India.In the U.S., Amazon’s Prime Day sales will total $5.8 billion, according to estimates from Coresight Research.To contact the reporter on this story: Spencer Soper in Seattle at firstname.lastname@example.orgTo contact the editors responsible for this story: Jillian Ward at email@example.com, Molly SchuetzFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Consumers seemed to think it was a prime time to shop. On Monday and Tuesday, Amazon (XE:AMZ) celebrated Prime Day — a two-day sales event — and millions of consumers were enticed by the deals. Indeed, Prime members snapped up upwards of 175 million items during the sale period, Amazon announced Wednesday.
Last year was tough for the shares of Chinese e-commerce juggernaut JD.Com (NASDAQ:JD). JD stock tumbled from its $50 highs in early 2018 to its $20 lows in late 2018, as everything that could've gone wrong for JD did go wrong.Source: Shutterstock The growth of China's economy slumped to multi-year lows in 2018. The trade war between the U.S. and China heated up, putting further downward pressure on China's economy. Chinese consumers lost confidence. That weighed on JD's revenue growth rates, which , like China's economy, slumped to multi-year lows. The company's margins came under pressure as JD continued to invest in next-generation opportunities. * 8 Penny Stocks That Have Fallen From Grace JD's profit was flat in 2018, and JD stock lost more than half of its value.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBut the company's performance has been very different in 2019. China's consumer and services sectors have picked up steam. The U.S.-China trade war has cooled. Chinese consumers are regaining their confidence. JD's revenue growth rates are stabilizing. Its margins have started expanding again.As a result of these trends, JD's profit growth has accelerated in 2019, and JD stock has risen an impressive 47%.This renewed strength of JD stock price will persist for two major reasons. First, China's consumer economy in general and its digital consumer economy in particular are showing signs of improving, at the same time that JD's margins are rebounding. Second, JD.com stock remains undervalued relative to its long-term growth potential.This coupling of a favorable valuation and improving operational trends should keep JD stock price on a wnining path for the foreseeable future. The Trends Are Now in Favor of JD StockIn 2018, the trends were moving against JD.com stock.Specifically, China's retail sales growth slowed from 10.2% in 2017, to 9% in 2018, while the proportion of physical consumer products bought online fell from 28% in 2017 to 25.4% in 2018. This online retail slowdown caused JD's revenue growth to drop. The company's revenue growth rate went from over 40% in 2017 to under 30% in 2018. At the same time, JD was investing a large amount of money in next-generation growth opportunities, and its operating margins sank 50% in 2018.In 2019, however, the trends have shifted, and they are now working in favor of JD stock.China's retail sales climbed 8.4% year-over-year in the first half of 2019. While that's slower than 2018's 9% growth rate, things are improving for JD stock in 2019. In the first half of 2019, retail sales growth (8.4%) was greater than first-quarter retail sales growth (8.3%), retail sales growth in June surged to its highest level since March 2018, and online retail sales growth in the first half of 2019 (21.6%) was higher than Q1's online retail sales growth (21%).Broadly, then, China's consumer economy is showing signs of rebounding.Additionally, JD's revenue growth rates are stabilizing in the 20% range, and JD's margins are bouncing back as the impact of its growth investments fades (its operating margins have risen by 0.7 -plus percentage points in each of the past two quarters).All in all, the things which whacked JD stock in 2018 (a slowing consumer economy, falling growth rates, and compressing margins) have reversed course in 2019. JD Stock Remains Undervalued in the Big PictureIn the big picture, JD stock remains undervalued relative to JD's long-term growth potential.According to eMarketer, China's online retail market will continue to grow at a robust annual rate of 15%-plus for the next several years. That makes sense. It's growing at a 20%-plus rate today, and China has a lot of people, the majority of whom are rapidly urbanizing and digitizing. This non-cyclical demographic trend should spur strong growth throughout China's online retail market for the foreseeable future.JD is one of the two biggest players in that market. The platform is already so big - and so embedded into China's consumer economy - that it's tough to see it being unseated anytime soon. As a result, as China's online retail market grows at a 15%-plus pace over the next several years, JD's revenues should increase at a similar rate.Alongside that healthy revenue growth, JD's margins should expand as it grows. Companies with large retail operations like Amazon (NASDAQ:AMZN) and Walmart (NYSE:WMT) have operating margins of around 4-5%. JD should be able to reach that point over time. Thus, by 2025, it's reasonable to predict that JD's operating margins will rise towards 4%.As a result, it's clear that JD's earnings per share can rise towards $3 by 2025. Based on a 20-times forward multiple, which is average for the consumer discretionary sector, the 2024 price target for JD stock would be $60. Discounted back by 10% per year, that equates to a 2019 price target of roughly $37.JD stock presently trades at just a hair under $31. The Bottom Line on JD Stock2018 was an awful year for JD stock. But 2019 is turning out to be a great one. Already up 47% year-to-date, JD stock price looks ready to run even higher into the end of the year.As of this writing, Luke Lango was long JD, AMZN, and WMT. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip * 7 Services Stocks to Buy for the Rest of 2019 * 6 Stocks to Buy and 1 to Sell Based on Insider Trading The post Why the 2019 Rally of JD Stock Isn't Over Yet appeared first on InvestorPlace.
Walmart Chief Executive Doug McMillon discussed the retail giant’s digital progress and the competition, including Amazon.
Quietly, Big Blue closed the doors at a site on Cornwallis Road, a move that meant more than 300 pink slips in January. But records show it was an isolated case.
Amazon and Walmart are cutthroat competitors. But they share one important thing: Both companies have been miscast as corporate villains by Democratic presidential candidates trying to score easy outrage points with voters. Yahoo Finance's Rick Newman joins The Final Round to discuss.