Target vs Walmart: what’s a better buy ahead of earnings this week?

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is a News Reporter at Invezz covering the European, Asian and North America stock markets. Wajeeh has 5… read more.
on May 16, 2022
  • Jerry Storch explains why Walmart is a better pick than Target right now.
  • Both retail giants are set to report their quarterly results later this week.
  • WMT is up 2.5% YTD in an environment that has the XRT down about 25%.

Walmart Inc (NYSE: WMT) and Target Corporation (NYSE: TGT) continue to hold their own this year in the face of a rather challenging operating environment that now has the SPDR S&P Retail ETF down 25% versus the start of 2022.

Why is Walmart a better pick than Target?

While both are great stocks, there’s reason to pick Walmart over Target right now, says Jerry Storch – the former CEO of Toys ‘R’ Us. Speaking with CNBC’s Tyler Mathisen, he noted:

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These are good companies; they’re going to continue to be strong players. But if things get really bad and we go into real recession, Walmart always does better than Target. This has been going on for years.

Walmart is scheduled to report its quarterly results on Tuesday, before the bell. The stock is still in the green, up 2.5% for the year.

Higher gasoline prices not a headwind for Walmart

Storch agrees the U.S. consumer is weakening but doesn’t see the rising gasoline prices as much of a headwind for the likes of Walmart Inc. On CNBC’s “Power Lunch”, he said:

Where consumer won’t spend is Macy’s, Nordstrom, Bed Bath & Beyond or luxury retailers. But I think [rising gasoline prices] push them to Walmart. It’s a name that takes least amount of consumer dollar and wastes it on overhead and other things.

The American multinational is expected to earn $1.48 a share this quarter on $138.9 billion in revenue. Among other notable WMT bulls is Lido Advisors’ Gina Sanchez. Street has an average PT of $166 on the stock.

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