Walmart Stock Reaches All-Time High While Markets Plunge

Analysts expect Walmart's stock to rally well beyond the year.

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Amid plunging stocks, Walmart stock is rallying, this past week at 2 percent higher. The coronavirus created market instability last week, sending many stocks south. 

But grocery store panic runs have sent Walmart stock higher. The big-box retailer is even hiring more workers to meet an ever-increasing demand as the bulk of Americans stock up on goods.

Global wealth manager, Credit Suisse, expects consumer shopping to be accelerated for some time.

Moreover, falling gas prices are lowering Walmart’s supply chain expenditures. This could possibly place more money in consumer’s hands provided job losses due to the pandemic are contained.

Seth Sigman, Credit Suisse research analyst, said: “The unfortunate spread of the COVID-19 virus has created an unprecedented spike in demand for grocery and household products as consumers prepare for weeks (maybe months) of school closures, work from home, and restaurant closures.”

Sigman made the comments on Wednesday in a note sent to clients after he upgraded Walmart stock to outperform.

The month of March has seen volatile trading over economic fears surrounding the coronavirus. The three major stocks are in a bear market, down over 20 percent from recent highs.

The S&P 500 is down by 25 percent. Walmart, the world’s largest company by revenue, is one of the bankable stocks that manage to stay in the green. The retailer has a market value of around $348 billion.

In recent weeks, consumers have been flooding Walmart in search of essential such as cleaning supplies, toilet paper, and food. Many store shelves have been left bare by the end of the day and are restocked overnight, only for the same scene to play over again the next day. The retailer is barely keeping up and is open fewer hours each day while allocating set hours for seniors who want to shop during off-times. But, off-times for Walmart seem rare these days.

Despite the government’s social distancing policy which asks Americans to stay home unless necessary, Walmart stores have stayed busier than ever. Credit Suisse said the fury could go on for a year or more. The firm said “structural changes in consumer shopping” are occurring and could last five or more years.

“This change should be sticky, and favor Walmart as it’s invested in its infrastructure, technology, and people, to evolve its model.” Sigman said. “Bottom line, Walmart is well-positioned to serve the customer through this difficult period as well as on the other side, as the customer acquisition benefits compound.”

Analysts say Walmart is one of the few companies that are well-positioned to deliver its financial targets.

Jim Cramer from CNBC said, “What happens when we get through this? Do we look at the companies that have the cleanest balance sheets that are the winners? I mean, is Walmart going to be the nation’s retailer?”

It’s worth noting that Walmart shares have outperformed during previous recessions.

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