1 Retail Stock I'd Rather Own Than Best Buy

Last week, Best Buy (NYSE: BBY) posted mixed results for its fiscal 2026 fourth quarter, missing analysts' consensus revenue expectations but beating earnings expectations. Looking ahead to its fiscal 2027, CFO Matt Bilunas said the retailer was "excited about the momentum in our business," but also warned it will "continue to navigate a mixed macro environment."

Despite the quarter's mixed results and the macroeconomic challenges the company may face, investors still liked what they saw enough to boost the stock price last week after the report was published.

Best Buy certainly grabbed headlines after its earnings report, but I believe another retail stock has much more upside ahead.

Offering the essentials

When I look at Best Buy, I see a business centered around selling nice-to-have electronics. When I look at Walmart (NASDAQ: WMT), I see a business not only centered on selling need-to-have items, but also one that is increasing its ability to fulfill a wide range of needs in one order. For example, customers can order prescriptions from the Walmart pharmacy, order groceries, and have both delivered together.

During times of economic uncertainty, people may delay buying a new computer or upgrading their phone, but they won't stop buying groceries or getting their prescriptions.

While Walmart gets people in the door by offering them low prices on general merchandise and groceries, it has also been broadening its revenue sources.

Though it's not typically recognized for its advertising business, it has one, and its global advertising revenue climbed 46% to nearly $6.4 billion in its fiscal 2026 (which ended Jan. 31). It's also increasingly offering more reasons for customers to keep coming back through its Walmart+ subscription, which includes benefits like early-access deals, savings on fuel, and free shipping, among other perks.

What to consider before making an investment

Investors have already started to recognize the investable opportunity in Walmart, so buyers now will have to pay more of a premium to become shareholders or add to their holdings.

Source image: Getty Images.

Its forward price-to-earnings (P/E) ratio of around 42 is higher than it has been in the last several quarters. Over the last five years, the stock price has gained nearly 177%, far surpassing the S&P 500's rise of around 71%. And so far this year, the stock is up 11%.

All of that means Walmart is currently priced for continued strength. It will need to keep executing to outperform the broader market and live up to that valuation. Still, this is the type of company that can continue to reward long-term shareholders as it diversifies its revenue sources, increases its reach through its membership program, and uses technology to further enhance its efficiency.

Jack Delaney has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Best Buy and Walmart. The Motley Fool has a disclosure policy.