Investing

This Stock-Split Stock is Up 86% This Past Year and Doesn't Plan on Stopping Anytime Soon

Joey Frenette

Published: December 16, 2024 10:05 am

Walmart (NYSE:WMT) is one of those stock-split stocks that seemingly cannot be stopped. Shares of the high-performing retail giant are now up just shy of 86% over the past year and around 58% since the latest 3-for-1 split became official on February 26, 2024. Undoubtedly, stock splits can be tempting to chase, especially for newer retail investors enticed by the opportunity to get more shares for their money. Of course, a stock split, though exciting for some, does not create intrinsic value for shareholders, new or old.

24/7 Wall Street Key Points:

• Walmart stock has stayed hot after its 3-for-1 split experienced earlier this year.
• Shares still look well-equipped to gain further as the firm does everything to keep the price “rollbacks” coming.
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Though, if you’re cutting a pumpkin pie into smaller pieces, more people can buy a slice with less money in their pockets. While becoming more accessible to retail investors isn’t an indicator of significant gains ahead, it is pretty intriguing to keep up with the many blue-chip stocks that have been splitting in response to robust rallies in recent years.

Even if Walmart hadn’t split earlier this year, it’d still probably be up big, thanks to its relentless focus on driving customer value. Indeed, it has been one of the retail leaders in lowering prices, something that I’m sure everybody can appreciate after the unpleasant inflationary period we’ve been through. It’s not just those with budgeting constraints who have been applauding the affordability at the local Walmart.

Richer customers have also been loving the rollbacks. And they seem to be sticking around despite prior calls for them to head back to pricier, upscale retail chains once inflation has gone back to normal. With annual inflation hitting 2.7% for November, it certainly seems like inflation is back under control. But looking underneath the headline number, it’s still concerning that grocery prices and rent are still climbing at a relatively warm rate.

Consumers crave value. More of it may be on the horizon for Walmart shoppers.

Indeed, American consumers, regardless of how much they have saved up in their bank accounts, need a break from continued inflation on must-haves. By shopping at Walmart, they’re getting that break. As long as the value is there, consumers will likely stay loyal to the $763 billion retail behemoth.

With Walmart director Bob Moritz buying half a million dollars worth of WMT shares, I’d argue the red-hot retailer has even more market share to take and ground to run as the company looks to not only save its customers money but time as the firm bets big on everything from shopping assistants to grocery delivery. Indeed, some of the most significant technological (think AI) catalysts may have yet to drive the bottom line.

The rise of autonomous delivery vehicles and increased warehouse automation are initiatives that could allow the retail giant to keep “rolling back” its prices over the coming years. Indeed, call it AI-driven deflation, if you will. As for Walmart’s competitors, they’ll either need to hop on the AI bandwagon to pick the low-hanging fruit to allow financial flexibility for lower prices, or they’ll lose their market share of the behemoth. My guess is it’ll be a struggle to keep up with Walmart. The retail giant’s ability to “roll back” prices aggressively makes its economic moat a rather wide one that could prove difficult to surpass.

The bottom line on Walmart

In the harsh world of retail, customer loyalty comes second to competitive pricing, convenience, and added value from other services.

With Walmart excelling on most fronts, it should be no mystery as to why WMT stock is one of the Dow Jones Industrial Average’s best performers for 2024. With considerable momentum riding behind its business and constant “rollbacks” that will likely keep customers returning, the stock could have room to keep surging higher despite its hefty trailing price-to-earnings (P/E) multiple of 38.95 times.

When you think of Walmart as a durable, defensive growth stock with the right catalysts in place, the historically swelled multiple isn’t too difficult to palate, at least in my opinion. Should Walmart stock’s impressive rally extend another few years, perhaps we’re not all too far off from the next stock split.