Many experts believe the COVID-19 pandemic will fizzle out by the second half of 2021. But between now and then, however, global industrial and commercial operations will recover slowly. So, to bottom-line it, the economy is in a recovery mode but not completely out of the woods. There is still an element of uncertainty surrounding the recovery given high unemployment levels, weak consumer spending, and…
a slow manufacturing sector. According to Jim Cramer, host of CNBC’s popular show “Mad Money,” the stock market is on “a highway to the danger zone.” He suggests investors to exercise much caution. In these circumstances, we believe that blue chip stocks are the best picks.
Blue chip stocks are inherently safer investment options given their solid long-term return potential, which often protects them during short-term market fluctuations. With robust financials and sound business models, we think these companies are a must-have in the portfolios of long-term investors.
Walmart Inc. (WMT – Get Rating), Verizon Communications Inc. (VZ – Get Rating), McDonald’s Corporation (MCD – Get Rating), and 3M Company (MMM – Get Rating) are four such stocks that have demonstrated resilience during downturns because of their fundamental strength. These companies have performed steadily in 2020 and are well-placed to maintain their momentum this year and beyond irrespective of economic and market conditions.
WMT is a global retailing giant in terms of revenue. Walmart U.S., Walmart International, and Sam’s Club are the company’s three core segments. The company operates in various businesses that include hypermarkets, supermarkets, cash and carry stores, warehouse clubs and discount stores. The company has nearly 11,500 stores and several e-commerce websites under 56 banners across 27 countries.
WMT is now laying plans to build dozens of 20,000 square-foot to 30,000 square-foot automated warehouses in its stores to accelerate customers’ online delivery. At these centers, robots, rather than employees, will gather thousands of pantry items and frozen foods.
During the third quarter, ended September 30, 2020, WMT’s total revenue climbed 5.2% year-over-year to $134.7 million. Walmart U.S. comp sales rose 6.4%, led by strength across general merchandise, health & wellness and food. Meanwhile, its U.S. eCommerce sales surged 79% on a rise in online shopping during the pandemic. Its EPS for the quarter increased to $1.34 from $1.16 posted in the same period last year.
Analysts expect WMT’s revenue for the quarter ending January 31, 2021 to be $148.1 billion, representing a 4.5% increase year-over-year. Its EPS for the quarter is likely to increase 8.7% to $1.50.
WMT ended yesterday’s trading session at $144.06, rising 25.1% over the past year. Over the past six months WMT has gained 9.3%.
WMT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors with the weighting of each optimized to improve overall performance.
WMT also has an A grade for Stability and B grade for Quality, Value, and Sentiment. It is ranked #2 of 41 stocks in the A-rated Grocery/Big Box Retailers industry.
In total, we rate WMT on eight different levels. Beyond what we stated above, we have also given WMT grades for Momentum and Growth. Get all the WMT ratings here.
VZ offers communications, information, and entertainment products and services to verticals that include consumers, businesses, and governmental entities worldwide. Its consumer segment delivers postpaid and prepaid service plans as well as internet services. VZ’s business segment offers network connectivity products, as well as private networking, private cloud connectivity, and virtual and software defined networking.
During the third quarter, ended September 30, 2020, VZ’s total operating revenue declined 4.1% year-over-year to $31.5 billion. Its EPS for the quarter also declined 4.1% over the year to $1.25. The company recorded 136,000 retail postpaid net additions during the quarter. Its total retail postpaid churn rate during the quarter was 0.80%.
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