3 Reasons Walmart Is a Must-Buy for Long-Term Investors

Core Viewpoint - Despite current economic challenges such as tariffs and inflation, a long-term investment perspective is essential, particularly in strong businesses like Walmart that can weather short-term fluctuations [1]. Group 1: Company Overview - Walmart has established itself as a successful retailer with a focus on cost containment, allowing it to offer low prices to customers [3]. - The company generated over $680 billion in revenue for the latest fiscal year, reflecting a 5.6$29.7 billion, up 9.7% [4]. Group 2: Market Position and Growth - Walmart's ultra-low prices attract a large customer base, particularly during economic downturns, positioning the company for future growth [5]. - In the fourth quarter, same-store sales in the U.S. increased by 4.6%, with over half of this growth attributed to higher customer traffic, indicating market share gains and appeal to higher-income demographics [6][7]. Group 3: Future Investments - The management is committed to future growth, planning to invest 3% to 3.5% of sales in capital expenditures, which translates to a significant amount given sales nearing $700 billion [8]. - Walmart is enhancing consumer experience through technology investments, including online ordering, in-store pickup, and same-day delivery options [8]. Group 4: Additional Revenue Streams - The company has launched Walmart+, a subscription service offering benefits like free shipping and discounted gas, which could enhance customer loyalty and revenue [9]. - Walmart's advertising business, although currently less than 1% of annual revenue, grew by 27% last year and has the potential to become a significant revenue contributor in the future [10]. Group 5: Investment Considerations - Walmart's combination of low prices, convenience, and a proactive management team makes it an attractive long-term investment, with shares having gained nearly 39% over the past year, outperforming the S&P 500 by about 20 percentage points [11]. - The current price-to-earnings (P/E) ratio for Walmart is 35, compared to 28 for the S&P 500, indicating high investor expectations [11].