Profit Pregame

How to Play This “COVID Crisis Winner”

It’s another important week of earnings

Walmart knocked earnings out of the park.

What’s happening?

If there’s one safe place to land in the retail sector – it’s big box stores. As we talked about yesterday, consumers are looking for stores in which they can get everything they need in one stop. From groceries to electronics, stores that can offer a wide variety of products are the ones seeing the most foot traffic currently.

And it seems if those same stores got a boost amidst the pandemic shutdowns as well.

Walmart released earnings recently and the store saw a big boost last quarter as shoppers spend their stimulus checks on home goods, electronics, and lawn care products.

On Tuesday, Walmart reported that at stores that had been open for at least one year saw an increase of 9.3% in sales. This increase brought sales to $93.3 billion during the second quarter. And their online storefront performed even better – growing 97%. This helped increase Walmart’s profit 79.4%, bringing it to $6.4 billion.

Where’s the money?

Walmart was deemed “essential” during the shutdowns, keeping their doors open. And while many consumers pulled back on spending, they continued to buy household goods and food and Walmart was their main stop.

And while this is good news, the pandemic also brought on another hurdle. Corona caused a massive increase in costs for businesses like Walmart. The company is the largest private employer in the United States and over the last few months they’ve brought more than 200,000 new workers to help keep up with demand.

Despite the increase in cost of running though, the company has been dubbed as one of the few winners of the COVID crisis and it doesn’t look as if this growth is going to slow down.

But before you jump at this stock – here’s how I would play it and how you should too…

How can I get some?

Walmart’s success is nothing short of impressive. Despite being part of a struggling sector, it has come out not only in one piece but also with solid growth to show for it.

It seems like a no brainer investment. But as you know, you never want to jump into a trade without a plan. Here’s what I’m seeing…

Walmart’s stock has been on a tear over the last few months – nearing all-time highs and truly outperforming the rest of its sector. However, the stock was overbought in earnings, so we’re seeing a some selling pressure.

But don’t let this selling pressure put you off. I would encourage you to buy Walmart on any pullback. And as long as the market stays strong, I’ll believe you’ll see a good return on your investment.

As You Can See…

Even though many industries are still feeling lingering effects of lockdowns and forced closings, there are still reasons to feel optimistic about several opportunities.

Regardless of what the rest of the year brings, my Project 303 readers and I will continue to use the recommendations of my S.C.A.N. trading system…

Even in 2020’s volatile markets, it’s still been able to deliver plenty of double-and triple-digit winners.

And like I mentioned above, there are plenty more in our crosshairs.

Click here now to get on board before we take our next profits.

In the spotlight: Kohl’s earnings

Kohl’s released earnings on Tuesday and while the numbers weren’t anything to celebrate by any means, they weren’t as bad as many expected.

The company’s revenue fell 23% during the pandemic plagued second quarter. And while this seems like a massive drop – the company say digital sales soar 58% compared to a year ago. Consumers bought up things like workout gear, pajamas, toys, and clothing. These sales ended up making up 41% of total sales for the quarter. This is a big jump from last year’s 20% make up.

As far as earnings per share, Kohl’s reported a loss of $0.25 versus the $0.83 loss that expected. And when it comes to earnings, the company raked in $3.21 billion versus the $3.09 billion that was expected.

But while these numbers aren’t as bad as expected- the outlook is grim. And even with the incoming holiday seasons, Kohl’s is not expecting to see great numbers. But Kohl’s is planning for that- deciding to remain conservative for the remainder of 2020.

Kohl’s shares have fallen 54% this year and it seems as if the impacts of the pandemic are here to stay so I’ll be watching this stock from afar.

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