On Friday, KeyBanc Capital Markets spotlighted shares of Walmart Inc. (NYSE:WMT), Ollie's Bargain Outlet Holdings Inc. (NASDAQ:OLLI), and Tempur Sealy (NYSE:TPX) International Inc. (NYSE:TPX) as standout investment ideas for the upcoming year.
According to InvestingPro data, Walmart has demonstrated remarkable strength with an 84.47% return over the past year and currently commands a market capitalization of $750.32 billion. The endorsement comes as part of the firm's "Hardlines/Broadlines 2025 Outlook," which identifies these companies as poised for significant market share growth despite a backdrop of high valuations and potential economic headwinds.
The analyst from KeyBanc noted the uptick in investor enthusiasm following the election on November 5, 2024, with the S&P 500 showing a 1.5% increase, although it had risen by 5.4% before the Federal Reserve's meeting on the previous Wednesday.
Positive signals from consumer spending reports in November and December were acknowledged, yet the firm maintained a cautious stance in light of near-term risks such as high valuations, a less dovish Federal Reserve, and elevated interest rates. The expectation is that consumer spending may experience fluctuations, with possible downturns on the horizon.
In this environment, KeyBanc expressed a particular bullishness on companies with unique market share stories, maintaining an Overweight rating on WMT, OLLI, and TPX. Walmart's strong market position is supported by its consistent dividend payments, which InvestingPro data shows have been maintained for 52 consecutive years, with increases for the past 29 years.
The company's financial health score is rated as "GOOD" by InvestingPro analysts, though current valuations suggest the stock is trading above its Fair Value. The firm's outlook suggested that OLLI is set to capitalize on a robust closeout market and customer loyalty, alongside an aggressive new store expansion strategy, which includes acquiring select locations from Big Lots (NYSE:BIG). This expansion is projected to exceed 10% in 2025.
Tempur Sealy International (TPX) has managed to expand its market share throughout 2024, despite challenging operating conditions. KeyBanc forecasts that TPX will continue this trajectory, bolstered by the pending acquisition of Mattress Firm, an imminent Sealy brand refresh, and the potential for an industry rebound.
Walmart (WMT) has been recognized for its substantial market share gains across various categories and channels in 2024. These gains are expected to persist, driven by Walmart's strong value proposition to consumers, a diverse array of growth initiatives, and advancements in supply chain automation.
With revenue of $673.82 billion in the last twelve months and a solid 5.48% revenue growth rate, InvestingPro analysis reveals 15+ additional exclusive insights about Walmart's performance and prospects, available through their comprehensive Pro Research Report. KeyBanc's selection of these companies underscores their individual strategies for growth and market dominance in the face of a complex economic landscape.
In other recent news, FedEx (NYSE:FDX) and Walmart have been the focus of various financial institutions. TD Cowen reported that FedEx is better positioned to enhance profitability through cost savings, especially with its Network 2.0 plan aimed at reducing network overlap, expected to continue through 2027.
Meanwhile, Tigress Financial Partners raised the 12-month price target for Walmart to $115, maintaining its buy rating on the retail giant due to a robust growth trajectory and market share gains. Bernstein, a division of SocGen Group, maintained an Outperform rating on Walmart, expressing confidence in the retail giant's potential to capitalize on its scale and enhance value for customers, particularly in the e-commerce sector.
RBC Capital Markets also raised its price target for Walmart from $96.00 to $105.00, sustaining its Outperform rating on the stock, indicating a positive forecast for Walmart's financial performance.
These recent developments highlight the positive outlook for both FedEx and Walmart, with financial institutions recognizing their potential for growth and profitability. Analysts from these firms have pointed to strategic moves, such as Walmart's acquisition of consumer electronics company VIZIO, and FedEx's Network 2.0 plan, as key factors in their positive prognostications.
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