ETFs
Walmart Hits New Highs on Strong Q1 Profits: ETF to Buy – May 17, 2024
Before the opening bell yesterday, Walmart (WMT – Free report) reported strong results for the first quarter of fiscal 2025, in which it beat both profit and revenue estimates. The megaretailer offered upbeat forecasts for the fiscal year, spreading enormous optimism and signaling a resilient consumer environment.
This pushed WMT shares to an all-time high. Investors looking to seize the opportunity should consider ETFs with the largest allocation to the world’s largest physical retailers. These include Select Consumer Staples Sector SPDR Funds (XLP – Free report) , Vanguard Consumer Staples ETF (VCC – Free report) , Fidelity MSCI Consumer Staples Index ETF (FSTA – Free report) , VanEck Vectors Retail ETF (RTH – Free report) And iShares Evolved US Discretionary Spending ETF (IEDI – Free report) .
Focus on Walmart profits
Earnings per share came in at 60 cents, beating the Zacks Consensus Estimate of 52 cents and improving from year-ago earnings of 49 cents. Revenue rose 6% year over year to $161.5 billion and surpassed the consensus mark of $159.50 billion. U.S. comparable sales increased 3.8%. Notably, e-commerce sales jumped 21%, driven by in-store pickup and delivery and marketplace.
The retailer reached a record number of members and more, resulting in member revenue growth of more than 13% (read:Inflation Cools in April: 5 Sector ETFs and Stocks to Thrive).
The mega-retailer raised its guidance for fiscal 2025. It now expects revenue growth to be at the high end of or slightly above its previous guidance of 3% to 4% and profit per stock is at the high end of or slightly above initial forecasts of $6.70 to $7.12. For the second quarter of fiscal 2025, Walmart expects sales growth of 3.5% to 4.5% and adjusted earnings per share in the range of 62 cents to 65 cents.
Below we have detailed the ETFs:
Select Consumer Staples Sector SPDR Fund (XLP – Free report)
The SPDR Consumer Staples Select Sector fund targets the broad consumer staples space and tracks the Consumer Staples Select Sector Index. It has about 38 stocks in its basket, with Walmart in third place with 9.6%. XLP has the largest allocation in consumer staples distribution and retail, at 32%, while household products, beverages and food each account for a double-digit allocation. The SPDR Consumer Staples Select Sector Fund is the most popular consumer staples ETF with $15.3 billion in assets under management and average daily volume of 12.6 million shares. XLP charges 12 basis points in fees per year and has a Zacks ETF Rank #3 (Hold) with a Medium Risk Outlook (read: ETFs to make the most of sector rotation).
Vanguard Consumer Staples ETF (VCC – Free report)
The Vanguard Consumer Staples ETF also targets the broad consumer staples sector by tracking the MSCI US Investable Market Consumer Staples 25/50 Index. He holds 103 stocks in his basket, with Walmart in third place, with a 7.9% allocation. Vanguard Consumer Staples ETF manages an asset base of $6.7 billion and charges fees of 10 basis points per year. VDC trades a good average volume of about 96,000 shares per day and has a Zacks ETF Rank #3 with a Medium Risk Outlook.
Fidelity MSCI Consumer Staples Index ETF (FSTA – Free report)
The Fidelity MSCI Consumer Staples Index ETF provides broad exposure to the consumer staples sector by tracking the MSCI USA IMI Consumer Staples Index and holds 107 stocks in its basket. Of these, Walmart ranks third with an 8% share. The Fidelity MSCI Consumer Staples Index ETF has accumulated $1.1 billion in its asset base while trading a good volume of around 70,000 shares per day, on average. FSTA charges 8 basis points in annual fees to investors and has a Zacks ETF Rank #3 with a Medium Risk Outlook (see: all consumer staples ETFs here).
VanEck Vectors Retail ETF (RTH – Free report)
The VanEck Vectors Retail ETF provides exposure to the 26 largest retail companies by tracking the MVIS US Listed Retail 25 Index, which measures the performance of companies involved in retail distribution, wholesalers, online retailers, direct mail and television, multi-line retailers, specialty retailers. food and other commodity retailers and retailers. Walmart ranks fourth with a 7.3% share. VanEck Vectors Retail ETF has amassed $206.7 million in its asset base and charges 35 basis points in annual fees. It trades in a lower volume of 6,000 shares per day on average. The VanEck Vectors Retail ETF has a Zacks ETF Rank #2 (Buy) with a Medium Risk Outlook.
iShares ETF focused on US consumption (IEDI – Free report)
The iShares US Consumer Focused ETF is an actively managed ETF providing exposure to US companies with a focus on US consumer spending and consumer goods. It holds 205 stocks in its basket, with Walmart in fourth place with a 5.5% share. The iShares US Consumer Focused ETF has accumulated $21.6 million in its asset base and charges 18 basis points in fees per year. The volume is paltry for IEDI since it trades an average of 13,000 shares per day.
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