3 Big Box Retailer Stocks to Stock up on Right Now

Although policymakers are still debating the next steps on the current bank crisis and concerns about strong economic data, the stock market will likely remain under pressure. The big-box retail sector should be able to withstand the strong consumer spending and inelastic demand. It could be a smart move to buy shares in quality big-box retailers Walmart (WMT), Albertsons Companiess (ACI) and BJ's Wholesales (BJ), for steady returns. Continue reading ....

Recent economic data has shown that the Fed is facing a difficult task in fighting stubborn inflation. This was due to a strong labor force and persistently high inflation despite the failures at two regional banks. The big box retailers have the advantage of seeing steady growth despite the macroeconomic challenges.

Investors might consider adding the fundamentally sound stocks Walmart Inc., Albertsons Companies, Inc., and BJ's Wholesale Club Holdings, Inc. to their portfolio now.

The Fed has been relentless in its efforts to fight inflation over the past year. However, it still remains well above the 2% target. The Consumer Price Index (CPI), which rose 0.4% in February, and 6% over the same period last year, was up 6%. The Fed was expected to raise its rate by 50 basis points, due to the resilience of the job market and high inflation. This is before the collapse of Silicon Valley Bank and other important events.

Analysts expect the central bank to opt for a lower or no rate increase at its monetary policy meeting this week, given the recent bank failures. This will restore financial stability. Also, personal consumption expenditures (PCE), rose 5.4% year over year in January, indicating robust consumer spending.

Despite the fact that macroeconomic swings and their impact on consumer behavior seem to be a challenge for big-box retailers they still enjoy a strong demand because consumers don't tend to cut back on essentials. The technological advances that have been made since the pandemic should help keep the retail sector afloat.

This backdrop suggests that it might be smart to buy shares of WMT, ACI and BJ, which are fundamentally sound big-box retailer stocks and poised to capitalise on the industry's tailwinds.

Walmart Inc. (WMT)

WMT sells a variety of merchandise and services at low everyday prices through both retail stores and e-commerce sites. Walmart U.S., Walmart International and Sam's Club are the three main segments of the company.

WMT and Citi teamed up to make the Bridge platform accessible to the 10,000 small- and medium-sized businesses (SMBs), that make up WMT’s U.S.-based supply network. This collaboration will help to increase Walmart's U.S. supplier network's access capital via a network that includes over 70 lenders and 20+ financial institutions.

The company approved a $2.28 annual cash dividend per share on February 21st, which represents a 2% increase year-over-year. This was the 50th consecutive year for dividend increases. WMT's average four-year dividend yield is 1.67%. The current dividend of $2.28 represents a yield of 1.62% at prevailing prices. The dividend payouts of WMT have increased at 1.8% CAGR in the last three years, and 1.9% CAGR in the past five.

WMT's total revenues increased 7.3% year over year to $164.05 Billion in the fourth quarter ended January 31, 2023. The adjusted operating income increased 6.3% to $6.37Billion from the previous year. WMT's adjusted EPS was $1.71 which is an 11.8% increase year-over year. The company's attributable income grew by 76.2% to $6.28 Billion.

Street predicts that WMT's revenue will increase by 5% year over year to $147.36 million for the fiscal quarter ending April 30, 2023. In the next five year, its EPS will increase by 3.7% annually. It exceeded the revenue estimates for each of its four trailing quarters which is encouraging.

The stock gained 19.1% in the last nine months to close at $140.90.

WMT's strong foundations are reflected by its POWR Ratings. Our proprietary rating system gives the stock an overall rating A. This equates to a Strong Sell. The POWR Ratings evaluate stocks using 118 factors, each with its respective weighting.

It is #3 among the 37 stocks within the A-rated Grocery/Big Box retailers industry. WMT has also been rated A in Stability, B in Growth, Sentiment and Quality. Click here to see additional POWR Ratings of Value and Momentum for WMT.

Albertsons Companies, Inc.

ACI operates grocery and medicine stores. It sells general retail, groceries, fuel, pharmacy, and other goods and services. It also produces and processes food for retail sales.

ACI recently redesigned the Open Nature brand to reflect its commitment to a healthy lifestyle. Open Nature launched 12 new plant-based products in its expanding portfolio. These include non-dairy yogurt and dairy-free yogurt as well as non-dairy cheese options to help support a healthy, plant-forward diet at an affordable price.

These new offerings will help to drive consumer demand and increase the overall revenue of the company.

Brandon Brown, SVP, Own Brands, ACI, stated, "The expansion and quality of our Open Nature offerings is a demonstration of an ongoing commitment to the health and well-being of our neighbors and community."

ACI launched Sincerely Health in February. It is available on 16 of its banners' websites and grocery apps, including Albertsons and Safeway, Shaw's and Shaw's. ACI should be able to increase its business growth and operations through this affiliation.

ACI's net sales increased 8.5% year over year to $18.15 Billion for the quarter ended December 3, 2022. The company's gross margin increased 6% to $5.12billion from the previous year. The adjusted net income of the company was $505.10million, an increase of 10.5% over the previous year. Meanwhile, its adjusted net profit per Class A share rose 10.1% to $0.87 from the prior-year.

Analysts predict that ACI's fourth quarter revenue will rise 4.5% year-over–year to $18.17 trillion (end February 2023). It has an impressive earnings surprise record, exceeding the consensus revenue estimates for each of its four previous quarters. ACI shares have fallen marginally in the last five trading days, closing at $19.20 on the last trading day.

ACI's POWR Ratings are a reflection of its positive outlook. Our proprietary rating system rates the stock as a Strong Buy. The overall rating is A.

It is a B-grade in Quality, Value, and Sentiment. It is #6 in the same sector. Click here to view the ACI ratings for Momentum, Stability and Growth.

BJ's Wholesale Club Holdings, Inc.

BJ is a warehouse club that offers gasoline, perishable and general merchandise, as well as coupons books and promotions. Its primary focus is on the east coast of the United States. The company sells products via the websites BJs.com and BerkleyJensen.com as well as through its mobile app.

BJ joined Simbe on March 14 to bring Simbe's business intelligence software, Tally, across all clubs. Integration of Simbe's AI-powered technology in chain operations will allow for greater visibility into club conditions and more business insights. This should improve operational effectiveness.

Jeff Desroches is the Executive Vice President and Chief Operations Officer of BJ's Wholesale Club. He stated, "By deploying Tally at all club locations, we will get unprecedented insights which will leverage real time data, enabling our operation to continuously improve and ensure that our members have the best experience possible.

The company also announced five new clubs in the United States. This expansion will see the addition of a club in Madison (Alabama), allowing BJ to expand its retail presence to 20 states and meet the growing demand from its consumer base.

BJ's fourth quarter ended January 28, 2023. Its total revenue increased 13.1% over the previous year to $4.93 trillion. Operating income increased 22.7% to $192.79million from the previous year. Adjusted net income was $129.78million, which is a 24.4% increase over the previous year. However, adjusted EPS was $1, an increase of 25% year-over year. The adjusted EBITDA rose 18.7% to $271.33million, compared with the previous-year period.

The consensus revenue estimate for the second quarter, which ended July 2023, is $5.36billion. This represents a 5% increase over the previous year. The consensus EPS estimate for the next quarter of $1.06 is a slight improvement over the previous-year period. It also exceeded the revenue and EPS estimates for each of the four preceding quarters, which is an excellent result.

The stock gained 30.8% in the past nine months and closed the last trading session at 75.85.

BJ's strong prospects are evident in its POWR Ratings. According to our proprietary rating system, the stock is rated B overall. This means that it is Buy. It also holds a grade of B for sentiment. It is #19 among 37 stocks in the same industry.

Click here to view the additional ratings for BJ Growth, Value, Momentum Stability and Quality.

The best thing about the bear market is the fact that there are still thriving businesses trading at a significant discount to fair value.

Investor success is possible because of the combination of high earnings growth and low prices.

This report will focus on the top 7 stocks that are poised to rise in the coming weeks. Click the button below to get your copy.

WMT shares traded at $140.01 per Share on Tuesday afternoon. This was a decrease of $0.89 (-0.63%). WMT shares are down 0.85% year-to-date compared to a 3.92% increase in benchmark S&P 500 during the same period.

Shweta Kumari is the author