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The Zacks Analyst Blog Walmart, Costco and The Home Depot

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For Immediate Releases

Chicago, IL – September 17, 2024 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: as Walmart Inc. (WMT - Free Report) , Costco Wholesale Corp. (COST - Free Report) and The Home Depot, Inc. (HD - Free Report) .

Here are highlights from Tuesday’s Analyst Blog:

 

Retail Stocks to Counter the "September Effect"

September is often marked by increased market volatility, a phenomenon known as the "September Effect," which can lead to declines in equity markets due to economic factors, investor caution or profit-taking. This year, the stakes are even higher as the market closely watches the Federal Reserve’s two-day meeting starting Tuesday, where policymakers are expected to announce the first interest rate cut in more than four years.

A Fed rate cut, seen as a move to stimulate economic growth, could provide a temporary boost, but it also signals underlying concerns about the broader economy. In this context, blue-chip retail stocks, such as Walmart Inc., Costco Wholesale Corp. and The Home Depot, Inc., offer a compelling option for those looking to weather September’s uncertainties.

Why Blue-Chip Retail Stocks Are a Safe Bet

These blue-chip giants are known for their financial strength and history of delivering reliable returns to shareholders. They tend to be less volatile than other stocks, making them dependable choices for both seasoned investors and those newer to the market. They often provide steady dividend payouts, adding an extra layer of stability.

These retailers have strong market positions, excellent brand recognition, loyal customer bases and broad market reach. These factors provide them with a competitive edge and open up new growth opportunities. As the holiday season approaches, they are expected to see increased demand, making them attractive investment options right now.

If you are looking to safeguard your investments while still finding growth opportunities, here are three blue-chip retail stocks to keep on your radar.

3 Blue-Chip Retail Stocks to Watch

Walmart: Embracing Technology for Growth

Walmart has been working to strengthen its already formidable presence in the market. The company has embarked on a series of strategic e-commerce initiatives, encompassing acquisitions, partnerships and significant improvements in its delivery and payment systems. Walmart is committed to elevating its merchandise offerings, ensuring a diverse and appealing product assortment. Innovation extends to its supply chain, wherein the company is enhancing capacity and introducing cutting-edge solutions.

As of Friday’s session, Walmart’s market capitalization stood at $647.9 billion. This Zacks Rank #3 (Hold) company has a trailing four-quarter earnings surprise of 6.9%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Walmart’s current financial-year sales and earnings per share (EPS) suggests growth of 4.7% and 9.9%, respectively, from the year-ago reported numbers. The company pays out a quarterly dividend of about 21 cents per share (83 cents annualized). WMT’s payout ratio is 35, with a five-year dividend growth rate of 2.3%. (Check WMT’s dividend history here)

Costco: Leveraging Membership Model for Success

Costco has been navigating the market’s ups and downs pretty well. Strategic investments, a customer-centric approach, merchandise initiatives and an emphasis on memberships have been this discount retailer’s primary strengths. Costco's distinctive membership business model and pricing power set it apart from traditional players. Through a calculated approach that involves identifying untapped markets and tailoring offerings to meet customer preferences, Costco has managed to deepen its roots.

Costco has a market cap of $406.1 billion. This Zacks #3 Ranked company has a trailing four-quarter earnings surprise of 2.3%, on average.

The Zacks Consensus Estimate for Costco’s current financial-year sales and EPS implies growth of 5.1% and 10.4%, respectively, from the year-ago period’s actuals. The company pays out a quarterly dividend of $1.16 per share ($4.64 annualized). COST’s payout ratio is 29, with a five-year dividend growth rate of 12.6%.

Home Depot: Capitalizing on Home Improvement Trends

Headquartered in Atlanta, GA, Home Depot stands as another distinguished blue-chip stock, dominating the home improvement retail sector. Its consistent expansion in both Professional and Do-It-Yourself segments, fortified by an extensive product lineup and digital innovations, underpins its remarkable success.

The company's interconnected retail strategy and robust technological infrastructure have amplified web traffic, leading to growth in digital sales. As mortgage rates decline, it could potentially stimulate homebuying activity and drive demand for renovation and remodeling projects.

Home Depot has a market cap of $377.4 billion. This Zacks Rank #3 company has a trailing four-quarter earnings surprise of 1.6%, on average.

The Zacks Consensus Estimate for Home Depot’s current financial-year sales calls for growth of 3.2% from the year-ago period’s reported number. The company pays out a quarterly dividend of $2.25 ($9.00 annualized) per share. HD’s payout ratio is 60, with a five-year dividend growth rate of 11.5%.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance  for information about the performance numbers displayed in this press release.


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