Walmart is expanding beyond just physical retail sales.
Walmart's e-commerce and advertising businesses are growing faster than its retail business.
A new tech-forward approach should increase Walmart's competitiveness.
The economy operates in cycles. Sometimes consumers have cash to spend frivolously, and sometimes they check their budget before every purchase. In either case, Walmart (NASDAQ: WMT) captures a decent amount of this spending.
Up until the end of its last fiscal year, Walmart was the highest-revenue-generating public company in the world (Amazon currently holds the title).
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Walmart's stock has performed well over the past 12 months, up nearly 44% (as of March 16). Although that run has put the stock firmly in expensive territory (its price-to-earnings ratio is 46), it's a stock I plan to load up on this year.
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Sales in its physical stores will always be Walmart's bread and butter, but I'm excited about the progress the company has been making outside of in-store retail sales. In its last fiscal year (ended Jan. 31), e-commerce sales were up, its global advertising business grew revenue by 46%, and revenue from its membership subscription (Walmart+) continued to grow.
Retail is obviously a great business for Walmart, but segments like advertising and memberships provide Walmart with higher-margin businesses and recurring revenue streams that you don't see with general retail. They also have higher growth opportunities because they can scale quickly and aren't limited by physical shelf space.
The once-boring Walmart is now coming into the digital age and embracing a more tech-forward approach. It's a stock that I plan to add to and hold for quite some time.
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Stefon Walters has positions in Walmart. The Motley Fool has positions in and recommends Amazon and Walmart. The Motley Fool has a disclosure policy.