Walmart’s (WMT) stock is closing out its best year since 1998 as the discount retailer thrives in the current economic environment.
Consumers in the U.S. and Canada are increasingly turning to Walmart with consumer prices and interest rates remaining elevated.
At the same time, Walmart is pushing further into lucrative new areas that include advertising, online shopping, and home delivery.
The result is that Walmart’s stock has risen 80% this year, adding $340 billion U.S. to the company’s market capitalization and trouncing the results of competing retailers.
Shares of both Dollar Tree (DLTR) and Dollar General (DG), Walmart’s discount rivals, are each down more than 40% this year.
Walmart’s stock has also outperformed other retailers such as Target (TGT), Amazon (AMZN) and Costco Wholesale (COST).
Looking ahead to 2025, many analysts expect Walmart’s stock to continue to outperform as the company gains further market share and its profits increase.
Walmart is also benefitting as higher-income consumers also turn to the discount retailer in search of lower prices and bargains.
The company is expected to continue growing its newer businesses such as advertising and its third-party marketplace and fulfillment services.
The only risk to Walmart’s outlook moving forward is its valuation, which has gotten stretched in recent months.
Walmart shares currently trade for about 35 times forward earnings, well above its 10-year average of 21 times.
Currently, e-commerce and technology giant Amazon’s stock is less expensive than Walmart’s stock, trading at 33 times future earnings estimates.
The stock of Walmart is now trading at $95.42 U.S. per share, having gained 85% in the past 12 months.