Summary of U.S. Consumer Strategy and Quantitative Research Call Industry Overview - The call focuses on the U.S. Consumer sector, specifically Consumer Discretionary and Consumer Staples, which have underperformed the market by low double-digit percentages year-to-date in 2025 [2][15]. Key Insights and Arguments 1. **Valuation Multiples**: Price to forward earnings valuation multiples for Consumer Staples appear attractive relative to the market, suggesting potential investment opportunities [2][15]. 2. **Market Dynamics**: The Consumer Staples and tech sectors are experiencing contrasting trading dynamics, with concerns about an AI bubble and its potential burst [3][16]. 3. **Economic Pressures**: Cutbacks in healthcare and SNAP benefits for low-income consumers, combined with rising inflation, may lead to an economic slowdown, while tax breaks for wealthier consumers in 2026 could sustain market strength [3][16]. 4. **Flight to Safety**: In the event of economic downturns, the Consumer Staples sector is expected to benefit from a flight to safety, particularly companies with a global presence [4][17][18]. 5. **Investment Recommendations**: Focus on higher-quality, defensive names with international exposure that are trading below historical averages. Specific sectors to watch include Soft Beverages, Household and Personal Care, and defensive Broadline Retailers [6][21]. Additional Important Points 1. **Key Themes and Catalysts**: - Tariff volatility affecting apparel and household products - GLP-1 drug uptake impacting consumer behavior - Bifurcation of consumer spending due to benefit cutbacks affecting lower-income households while higher-income households may benefit from tax breaks [5][20]. 2. **Subsector Focus**: - In Consumer Staples, companies with international exposure are preferred. - In Consumer Discretionary, names with reliable earnings performance are recommended, with caution advised for those lacking quality bias [6][21]. 3. **Upcoming Events**: Anticipated events such as the World Cup and U.S. 250th anniversary celebrations could provide additional support for certain sectors like Hotels, Resorts, and Cruise Lines [6][21]. Performance Ratings - Companies rated as Outperform include BRBR, CPB, MDLZ, MKC, and others, while CAG, GIS, HSY, and others are rated as Market-Perform. DECK and TGT are rated Underperform [9][10]. Conclusion - The U.S. Consumer sector is navigating a challenging landscape in 2025, with specific investment strategies recommended to capitalize on valuation opportunities and mitigate risks associated with economic pressures and consumer behavior shifts [12][19].

Core Insights - Costco and Walmart have demonstrated contrasting strategies in retail, with Costco focusing on its membership warehouse model and e-commerce expansion, while Walmart emphasizes omnichannel transformation and marketplace growth [1] E-Commerce Growth - Walmart's digital business grew by 27% in Q3, driven by store-fulfilled delivery and marketplace expansion, with capital expenditures of $18.6 billion aimed at logistics and technology [2] - Costco's e-commerce grew by 13.6% in Q4, supporting its core business rather than transforming it, with comparable sales rising across all regions [3] Financial Performance - Walmart's international segment saw a 10.8% increase in net sales to $33.5 billion, while Sam's Club reported $23.6 billion with a 3.1% growth [4] - Costco's net income increased by 10.9% to $2.61 billion, maintaining a profit margin of 2.94% and an operating margin of 3.88% [5] - Walmart's net income surged by 33.0% to $6.09 billion, with operating income remaining flat due to share-based compensation charges [6] Comparative Metrics - E-Commerce Growth: Costco at 13.6% vs. Walmart at 27% - Net Income Growth: Costco at 10.9% vs. Walmart at 33.0% - Operating Margin: Costco at 3.88% vs. Walmart at 3.73% - P/E Ratio: Costco at 49.02 vs. Walmart at 40.39 [7] Strategic Outlook - Walmart's ability to sustain 27% e-commerce growth without further margin pressure is under observation, while Costco faces the challenge of accelerating digital growth without compromising its membership value [8] - Walmart's international strength and Sam's Club stability provide more avenues for success if U.S. retail softens, whereas Costco's global footprint is solid but less diversified [8] Investment Appeal - Walmart is positioned as a more compelling option for growth investors due to its 33% net income growth and 27% e-commerce surge, trading at a lower P/E ratio compared to Costco [10] - Costco appeals to defensive investors seeking stability and a proven membership model during economic volatility [11]

Core Insights - The appointment of female CEOs by the top three supermarket companies in China—Walmart, Hema, and Gao Xin Retail—indicates a significant trend in leadership within the industry [2] Group 1: Company Developments - Gao Xin Retail has announced the appointment of Li Weiping as the new CEO, joining other major players in the industry who have also chosen female leadership [2] - Walmart, Hema, and Gao Xin Retail have all appointed female CEOs within a short timeframe, suggesting a potential shift in corporate governance practices in the Chinese supermarket sector [2] Group 2: Industry Trends - The trend of appointing female CEOs is not limited to the largest companies, as mid-sized firms like Aoleqi are also following suit, indicating a broader movement towards gender diversity in leadership roles within the supermarket industry [2]

Core Insights - Walmart's stock has extended gains for the eighth consecutive trading session, closing at $115.18, which is a 0.29% increase on Friday [1] - Over the preceding seven sessions, Walmart's stock gained more than 10.36%, significantly outperforming the S&P 500 Index, which rose by only 2.27% during the same period [1] Company Performance - The stock performance indicates a strong upward trend for Walmart, with a notable increase in value over the last week [1] - The consistent gains suggest positive market sentiment towards Walmart, potentially driven by favorable business conditions or investor confidence [1]

This retailer is deeply out of favor right now, but a significant part of that is driven by consumers' concerns over rising costs.Inflation is usually pretty insidious, slowly eroding the purchasing power of your dollars. But occasionally, inflation intensifies to the point where it becomes an openly discussed problem.This occurred following the COVID-19 pandemic, and the concern about rising costs persists to this day, with consumers adjusting their buying habits accordingly. That's bad news for Target's ( ...

Core Insights - Walmart is developing its private label "Wojixian" as a response to the competitive pressures from e-commerce and emerging retailers, positioning it as a "budget version" of Sam's Club [1][2] - The shift towards private labels by traditional retailers like Walmart and RT-Mart is driven by the need to compete with e-commerce platforms and new entrants in the retail market [1][3] Group 1: Private Label Strategy - Walmart's "Wojixian" focuses on affordability and health, with visible pricing strategies such as "everyday low prices" [2][3] - RT-Mart is also enhancing its private label offerings, emphasizing low prices and health trends, but adopts a dual-brand strategy for its private labels [2][3] - The competition in the retail sector is prompting established players to adopt private labels as a core strategy to attract customers and improve profit margins [4][6] Group 2: Market Performance and Challenges - RT-Mart's parent company, Gao Xin Retail, reported a revenue decline of 12.1% year-on-year, highlighting the financial pressures faced by traditional retailers [3] - Walmart's performance in China is primarily driven by the success of Sam's Club, while its traditional hypermarket format is facing challenges, including store closures [3][4] - The competition for quality suppliers and production sources is intensifying as retailers like Hema and Dingdong Maicai have already established strong private label brands [4][6] Group 3: Supply Chain and Brand Development - Successful private label development requires strong supply chain management and the ability to create distinct brand value [6][7] - Retailers are increasingly focusing on sourcing high-quality suppliers, with Walmart currently evaluating a limited number of potential suppliers for its private label products [6][7] - The competition for premium suppliers and production capabilities is expected to escalate as traditional retailers enhance their private label strategies [6][7]

Core Viewpoint - Walmart's decision to transfer from NYSE to NASDAQ on December 9 marks a significant transformation in the capital market, creating the largest exchange migration record in U.S. history with a market capitalization of $853.1 billion, attracting global attention without an IPO or financing [2][9]. Group 1: Reasons for Choosing NASDAQ - The transfer is a result of Walmart's deep investment in technology, with over $10 billion allocated to areas such as artificial intelligence, supply chain automation, and digital payments [2][9]. - NASDAQ is seen as an ideal platform for Walmart to achieve higher valuation premiums and a strong "tech label," which is essential for its future growth and investment strategy [2][9]. - Post-transfer, Walmart is expected to be included in the NASDAQ 100 index, which will attract more passive investment and enhance its image as a "tech retail" leader [2][9]. Group 2: Competitive Landscape of Stock Exchanges - The transfer reflects a decade-long competition between NYSE and NASDAQ, with NASDAQ successfully attracting over 40 S&P 500 companies, while NYSE has drawn 347 companies during the same period [5][12]. - This competition is not just about the number of companies but also about the narrative and branding of the exchanges, positioning them as platforms for corporate strategic transformation [5][12]. - The emergence of the Texas Stock Exchange (TSE), set to launch in 2026, adds pressure on traditional exchanges, emphasizing the need for established players to retain major clients like Walmart [5][12]. Group 3: Implications for the Retail Industry - Walmart's transfer signifies a pivotal moment in the retail industry's technological transformation, indicating that technological capability will become the core competitive advantage rather than just scale [6][13]. - The move is seen as a harbinger of a new technological wave in retail, where competition will increasingly rely on innovation and digital transformation [6][13].

Core Insights - The largest retailer in America is experiencing rapid growth in its e-commerce segment, indicating a strong shift towards online sales [1] - The company is expected to further enhance its e-commerce capabilities as it transitions to Nasdaq, which may provide additional visibility and investment opportunities [1] E-commerce Growth - The retailer's e-commerce sales have been increasing significantly, reflecting a broader trend in the retail industry towards online shopping [1] - This growth in e-commerce is likely to continue as consumer preferences shift and the company invests in its digital infrastructure [1] Nasdaq Transition - Moving to Nasdaq is anticipated to bolster the company's market presence and attract more investors, potentially leading to increased stock performance [1] - The transition may also facilitate better access to capital for further expansion in e-commerce initiatives [1]

Group 1: Peter Lynch's Four Rules of Stock Investment - Rule 1: Understand the stocks held. Investors should be able to explain their reasons for buying a stock in simple terms. If the only reason for purchasing a stock is the expectation of price increase, it is advisable not to buy it [3]. - Rule 2: Economic predictions are futile. Investors should not attempt to predict interest rates or market movements, as even experts like Alan Greenspan cannot accurately forecast these [4]. - Rule 3: Do not worry about indices. Focus on individual companies like McDonald's and Walmart, as their performance can differ significantly from overall market trends [5][6]. - Rule 4: Patience is key. Investors have ample time to research companies before making purchases, and successful investments often come after years of observation [7][8]. Group 2: Common Dangerous Statements in the Stock Market - Dangerous Statement 1: "How much lower can the stock price go?" This mindset can lead to poor investment decisions, as seen with the example of Kaiser Industries [10][11]. - Dangerous Statement 2: "How much higher can the stock price go?" This can result in missed opportunities, as demonstrated by the case of Philip Morris [12]. - Dangerous Statement 3: "I can only lose a little since the stock price is low." This is misleading, as the potential loss is the same regardless of the stock price [15]. - Dangerous Statement 4: "Eventually, the price will rebound." Historical examples show that some stocks never recover to previous highs [16]. - Dangerous Statement 5: "It can't get any worse, so I should buy." This reasoning can lead to further losses, as seen in the railroad and oil drilling examples [17][18]. Group 3: Peter Lynch's Ten Pieces of Advice - Advice 1: Avoid long-shot companies that lack near-term earnings. These companies often do not succeed [26][27]. - Advice 2: Do not confuse growth with profitability. High-growth industries can lead to losses due to increased competition [28][29]. - Advice 3: Basic math is sufficient for investing. Investors do not need advanced mathematics to succeed in the stock market [30][31]. - Advice 4: Spend time reviewing balance sheets. A quick assessment can reveal a company's financial health [32]. - Advice 5: Research stocks as thoroughly as one would research a microwave. This diligence can lead to better investment outcomes [35]. - Advice 6: Great stocks are often unexpected. Investors cannot predict which stocks will become successful [36]. - Advice 7: Retail investors have significant advantages. They often have access to information that can inform better investment decisions [40][42]. - Advice 8: Professional investors may have biases that limit their investment choices. This can lead to missed opportunities in less conventional stocks [43][44]. - Advice 9: There will always be concerns. Investors must be prepared to tolerate uncertainty in the market [45][46].

Core Insights - Walmart Inc. is the world's largest retailer with over 10,500 stores globally, combining physical retail with a growing e-commerce platform [2] - The company's retail model focuses on high volume, competitive pricing, and efficient supply chain management, which enhances customer traffic and competitive advantages [3] - Walmart's omnichannel strategy is evolving, integrating in-store pickup, delivery, and digital services to boost higher-margin revenue streams like advertising and memberships [3][4] Financial Analysis - Forecasted Free Cash Flows (FCF) from 2025 to 2029 show a steady increase, with total present value of FCFs estimated at approximately $65.0 billion [5] - The terminal value, calculated using a perpetuity growth model, is estimated at $275.2 billion, leading to a present value of the terminal value of $171.0 billion [5] - The enterprise value is calculated at $236.0 billion, with net debt of $34 billion, resulting in an equity value of $202.0 billion [6] Valuation Metrics - The intrinsic value per share is estimated at approximately $25.57, while the current market price is around $109, indicating a margin of safety of -77% [6] - The discount rate used in the DCF analysis is 10%, with a terminal growth rate of 3% [6] - Despite a premium valuation, Walmart's stock trades above its intrinsic value under conservative DCF assumptions focused on free cash flow rather than revenue growth [7]