As the Dow Jones Industrial Average plummeted through 20,000 this week, one of its stocks is holding up against the sell-off.
Walmart, the world’s largest bricks-and-mortar retailer, has risen more than 13% in March as consumers stockpile amid the coronavirus crisis. The gain puts it on track for its best month since 2014. The Dow, meanwhile, is down more than 20% over the same period.
“In 1929 during the Great Depression, we had a run on the bank. In the 2020 coronavirus, we have a run on the grocery store and Walmart has about 50% of the groceries sold throughout the country,” John Petrides, portfolio manager at Tocqueville Asset Management, told CNBC’s “Trading Nation” on Wednesday.
Walmart generates more than two-thirds of its revenue from within the United States. Total sales are expected to climb by 3% in its April-ending quarter, according to FactSet estimates.
“When you have this type of panic and movement into hoarding and stockpiling groceries in this … countrywide quarantine, it’s not a surprise that Walmart is outperforming the market,” said Petrides.
JC O’Hara, chief market technician at MKM Partners, said Walmart could continue to outperform, given the shock to the consumer.
“When we’re in an environment now, we have more and more people working from home, and that causes disruption and this disruption is not just a one- or two-day phenomenon, we’re not sure of the duration. So when there is disruption, consumers’ habits change and there are definitely companies that benefit from this change in demand, and Walmart we think is a prime example,” O’Hara said during the same segment.
Walmart shares are up nearly 18% in the past week. The XRT retail ETF, which holds Walmart, has fallen 9% over the same stretch.
“One thing that I like about Walmart is the price action. In the S&P 500 we’re seeing relentless distribution, indiscriminate selling taking place across the board. But just [Wednesday], Walmart is making a new 52-week high, it’s at its all-time high. Right. So there is real demand for Walmart shares,” said O’Hara.
Wednesday’s breakout to new highs has O’Hara revising how high he sees Walmart coulod climb. He says the stock could scale to a new record of $140, implying 14% upside from current levels.