Walmart shares can be a bargain.
Former Walmart US CEO Bill Simon claims that the sharing sale of the retailer is linked to a delaying profit growth forecast and rate fears is to create an important opportunity for investors.
“I definitely thought that their guidance was pretty strong given that … nobody knows what will happen to rates,” he told CNBC’s “Fast Money” on Thursday, the day that Walmart reported the results of the fourth quarter.
But even if the American rates against Canada and Mexico are improving, Simon predicts that “nothing” should happen to Walmart.
“Ultimately, the consumer decides whether there is a rate or not,” said Simon. “There is a rate on avocados from Mexico. Do you have guacamole with your chips or do you have salsa and queso where there is no rate?”
Plus, Simon, who now on the Darden Restaurants board and the chairman is at Hanesbrandssees Walmart as an agile retailer.
“The big boys, Walmart, Costco, Goal” Amazon… have the delivery and the purchasing option to reduce rates by killing the product – bringing in different places [and] Developing their own private labels, “said Simon.” Those guys will choose rates. “
Walmart shares just saw their worst weekly performance since May 2022 – almost 9%tumbling. The stock price alone fell by more than 6%on its profit day. It was the worst daily performance of the shares since November 2023.
Simon thinks the sale is bizarre.
“I thought if you hit your songs and do it well and beat your income, things would usually go well for you in the market. But we know little. You have to have some magical dust,” he said. “I don’t know how you could have done the quarter much better.”
It is a deviation from his position last May on “fast money” when he warned that prosperous consumers created a “bubble” at Walmart. It came with Walmart shares that hit record highs. He noted that historical trends pointed back to service of convenience and price on a final shift.
But now Simon thinks that the economic and geopolitical background is so unprecedented that consumers with a higher income can permanently shop at Walmart.
“If you liked that story yesterday before the income release, you should love it today because it is … cheaper,” said Simon.
Walmart shares now drops by 10% compared to its highest hit on February 14. However, it has still risen around 64% in the past 52 weeks.
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