After last week's tech turmoil, I wanted something stable for this week's stock pick: a dependable stock, a haven where you can feel secure, whatever the market's doing outside. 

I chose Walmart WMT US , the world's largest retailer and a behemoth of a stock with a $995.0 billion market cap, annual sales in excess of $713.0 billion, and as much as $15.00 billion a year in free cash flow. 

When constructing a portfolio, it can be instructive to know what factors or characteristics a stock is associated with. 

Tech stocks are associated with factors such as momentum and growth, which have been hammered in recent weeks. 

Momentum, as measured by the ETF MTUM, is down by -21.39% over the last month, whilst the S&P 500 Growth index ticker IGX has lost -11.30% in that period. 

For its part, Walmart was up +17.09% over the last month. That's the kind of performance that makes the stock a defensive haven, leaning towards the quality, low volatility and dividend factors. 

 But why did Walmart perform like that? 

Here are some bullet points that help to explain Walmart's performance

• A Recession-Proof Product Mix: Over 60% of Walmart's US sales come from groceries and daily consumables. This non-discretionary revenue keeps cash flow stable regardless of how weak the broader economy gets.

• "Trade-Down" Capture: When high inflation or job losses pinch household budgets, middle- and upper-income shoppers abandon high-end grocers and move down to Walmart, driving counter-cyclical market share gains. 

•Buying Power: Thanks to its massive buying power, Walmart can force suppliers to absorb cost increases. This protects Walmart's "Everyday Low Price" strategy and keeps its margins steady even when competitors are forced to hike their prices.

• Diversification: Walmart is no longer just a low-margin retailer; it is aggressively scaling additional higher-margin revenue streams, such as its Walmart Connect ad network (operating at ~70% margins) and Walmart+ membership fees. 

• Sam's Club (its Costco rival) is a 600-branch warehouse membership club with an annual membership fee. UBS Wealth recently highlighted the attraction of this annuity-type income as a buffer against any margin pressures arising from agentic commerce and personal shopping agents. Sam's Club is estimated to have more than 60.0 million members who pay a $60.00 annual fee.

• Dividend Aristocrat: Walmart has had 53 consecutive years of annual dividend increases backed by highly reliable free cash flow.

Whilst Walmart might appear to be completely detached from the AI trade, it is a potential beneficiary of Artificial Intelligence, and the company has adopted it for its front-of-house operations, for customers, and for staff, as well as in its massive logistics and supply chain operations. 

Walmart has 280 million customers and 1.60 million associates or staff in the US. AI helps to improve communications between the company and these groups; it aids in offers and price discovery, for example. 

It seems to be working; back in March, CEO John Furner was quoted as saying that customers using Sparky, Walmart's in-app AI assistant, have an average basket size that’s approximately +35.0% larger than those who don’t use Sparky. 

Performance 

Walmart traded at a low of $103.39 on October 5th and as high as $131.82 on November 5th. In the chart below, you can see that Walmart (in magenta) comfortably outperformed the wider consumer staples sector (drawn in black) over the last couple of months. Walmart also outperformed the S&P 500 by +22.74% over the last month, an impressive achievement for a stock of its size in a supposedly unexciting sector.

Over the longer term, Walmart stock is up by +154.85% in 5-years, +434.366% over 10 years, and +716.83% over 20- years. 

I see Walmart as being two things simultaneously: firstly, a solid long-term defensive holding in a well-diversified portfolio; secondly, a tactical asset allocation play/haven when fear overrides greed, as it did last week and, in truth, has done since mid-June.

Overall rating: 4.0/5.0

Technical overview 

The technical picture of the last month has been very impressive; we have seen a solid uptrend supported by the 10-day moving average, which also posted a bullish MA crossover, moving over and above the slower-moving 50-day line.

Walmart posted 9 new highs over the last month, 12 in the last 3-months and 18 new highs year to date. 

It was looking overbought on its RSI 14 reading of 78 in early November, but that's now fallen to below 63.00 at the time of writing. There appears to be some horizontal support around $121.75 and again at $116.23.

Those with longer-term investment horizons might consider that as an entry point, though the June lows found just under $113.00 are also attractive. For those making a tactical trade, the mood of the market is likely to be the determining factor rather than price. 

Technical rating: 4.0/5

Fundamental overview 

There is an elephant in the room here, and that is Walmart's forward PE ratio, which is around 38 times earnings. There is no getting away from it. Higher than most of its peers in the consumer staples sector, though it's not higher than Costco’s forward P/E; however, Walmart's P/E is falling. Its dividend yield has grown by +30.56% over the last 5 years. Earnings are growing faster than revenues over the last 5 years, at +44.26% and 27.54%, respectively, suggesting that higher margins and operating efficiencies are doing their work. 

Fundamental rating: 4.0/5.0