InvestorPlace – Stock Market News, Stock Tips and Trading Tips
Note by Louis Navellier: From the looks of it, we’re in for a silent holiday shopping spree. Walmart reported earnings yesterday, and despite the numbers being fair, investors took exception to the bleak outlook. This begs the question: Is recession back on the cards for 2024? To answer, I invited Charles Sizemore – Senior Investment Analyst at InvestorPlace publishing partner The Freeport Society – to explore what problems we might be in 2024. He does one better and shares a way to thrive through it all.
Charles has released a brand new special report to help launch his free email newsletter, The Freeport Navigator. It is called The 24 Best Stocks for 2024. Click here to get your FREE copy and to sign up for Carlos’ FREE newsletter.
Take it away, Carlos…
*********
My lasting memory of Walmart Inc. (WMT) will always be its response to Hurricane Katrina back in 2005.
New Orleans looked like something out of the movie The Day After Tomorrow before all the flood waters froze. However, the government’s response was embarrassing.
It was a humanitarian disaster on American soil that left Uncle Sam looking both impotent and incompetent.
And then Walmart stepped in.
The company’s logistics system enabled the delivery of food and water to the hurricane refugees faster and more efficiently than the US military. When the government failed, Walmart succeeded. And it’s only gotten stronger since then.
Walmart is not just an iconic part of America’s retail economy.
It’s America.
Ninety percent of Americans live within 10 miles of a Walmart store, and in any given month, about two-thirds of all shoppers buy something in a Walmart store.
So, you can learn a lot about the state of the country by reading Walmart’s quarterly earnings reports and listening to management’s comments.
The insights it shared when reporting before the bell on Thursday were troubling.
In today’s letter, let’s break down Walmart’s earnings “findings,” dissect the caveats, and make a plan to navigate what’s ahead to safety and profits.
Consumer in Trouble
Walmart’s fiscal third-quarter earnings were a mixed bag. The company beat analyst expectations on revenue and earnings. And foot traffic increased 3.4% over the previous year, which was better than analysts expected. Great news!
Just…
The average ticket size was only 1.5% higher. Weak showing. And CEO Doug McMillon said the shopping spree was over, noting that “in the last two weeks of October, there were definitely some trends in the business that made us pause and kind of rethink the health of the consumer.”
Investors didn’t like hearing that, and WMT slid 7% in morning trading on Thursday.
We’re in for a bleak holiday spending season, folks. All signs point to the average American shrinking, in large part due to the brutal inflation of the past few years eating into their budgets. The return of student loan repayments and sky-high rents and real estate prices aren’t helping.
I expect we will see a recession in 2024…along with stubborn inflation. The best way to protect against this is with the stocks of America’s strongest, most Armageddon companies… or what I call the “Rich Man’s Coin”.
In an environment like this, you want companies in your portfolio that are mostly:
- Recession proof…
- Immune to government default…
- And inflation resistant.
Despite its forecasts and investor reaction on Thursday, Walmart checks all those boxes. In fact, that 7% selloff in WMT stock makes for a great bargain on a must-have stock.
Investment Lessons From The Past
Talking about Walmart makes me nostalgic. A few years ago, I was digging through an old filing cabinet that belonged to my grandfather, and I found this little blast from the past: a Walmart letter to shareholders from 1985, signed by company chairman and founder Sam Walton.
Long before Peter Lynch became a household name, my grandfather practiced his own version of the famous investor’s advice: Invest in what you know. It’s a philosophy that Warren Buffett applies to his investing as well, and his success speaks for itself.
Grandfather was an Arkansas boy, born and raised not far from Fort Smith. He liked to invest in local companies that he could observe firsthand. Walmart was one of them, with its headquarters in Bentonville.
I fondly remember driving with Grandpa to the Fort Smith Walmart to buy bright red Cherry ice cream at the snack bar. We would walk through the halls to see for ourselves what Mr. Walton was doing with his money.
Long after my grandfather passed away, the cash dividends from the Walmart stock he accumulated over his lifetime continued to pay for my grandmother’s retirement expenses…and my college tuition.
Without a doubt, Walmart is a great American company. Make sure it has its rightful place in your portfolio.
This is the secret of the Rich Man’s Coin. Buy the best, most durable American companies…and let them do their job of compounding their earnings and compounding your wealth.
I list several of my favorites in my new 24 Best Stocks for 2024 free special report (click here to download that report and sign up for my new free email newsletter). I also share the companies to invest in to survive the weakening of the dollar, globalization and several other trends combining to create the era of chaos we are all living in now.
This report is free for you. Simply sign up to receive my new free email newsletter – The Freeport Navigator – and I’ll send you the details of those five stocks right away..
To life, liberty and the pursuit of wealth…
Charles Sizemore
Chief Investment Strategist, The Freeport Society
More from InvestorPlace
The post Against Investing in the Gloomy Holiday Outlook appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
