Walmart’s (NYSE: WMT) near-term hurdle is weaker-than-expected Q2 sales in North America. The issue, foreshadowed by weak July retail sales, led to a 5% price drop, taking the stock to near its 52-week low.
That is the opportunity: the 52-week low and potential for long-term gains. While the near-term hurdle exists, it is offset by sustained growth and improved profitability, which is the critical factor. Walmart is a big business; more than moderate growth is unlikely given its size and scale, and its cash flow is the key. Cash flow enables healthy capital returns, which drive the stock price higher over time.
