Last year I posted a technical update on Walmart stock after it offered a disappointing profit and sales outlook. At that point the stock was trading in the $60’s and my thoughts were that the stock was going to head lower. “So between $52-$54 (if it gets there) may be enough support to halt the decline” was my actual reply.
Fast forward one year later and we can see that price did indeed drop into the upper end of the projected support range at $54.65 and has proceeded to rally to $74 as I type this (a gain of over 35%).
Today the company issued a better outlook along with an earnings and revenues beat. The company has made some meaningful investments in the e-commerce space to compete with Amazon.
While I thought the stock was intriguing as an intermediate term trade in the mid $50’s, I’m not nearly as excited now that the stock price is in the mid $70’s. While the traditional valuation metrics aren’t terribly overvalued (outside of the PEG ratio), they are certainly no longer undervalued either.
It’s probably more well positioned than Target in the near term, while both companies offer attractive dividend yields, I still think there are better options.
Going forward I think this $74-$75 level will be key resistance. A clear break above could be a signal that this turnaround has legs.
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