Trading Nation

Hold onto this top Dow performer after its recent pullback, investor says

Walmart is a solid bet as rally presses pause, traders say
Walmart is a solid bet as rally presses pause, traders say

One of the best-performing Dow stocks has taken a breather.

Walmart, the fifth biggest gainer on the Dow after a 24% rally this year, has retreated since making a record high on Dec. 1. The stock fell again Monday on reports it was exploring a float of 25% of its stake in India-based ecommerce company Flipkart.

Nancy Tengler, chief investment officer at Laffer Tengler Investments, says any Flipkart IPO would be a plus for Walmart.

"If they can pull this off, I think this is timely and frees up capital for Walmart to increase spending on AI, capex, you know, acquisitions. This is a stock that's in our top 12 best ideas portfolio. And despite the fact that Walmart has dramatically outperformed the S&P over the last five years, the valuation is still very attractive on a relative price-to-sales ratio basis," Tengler told CNBC's "Trading Nation" on Monday.

Walmart trades at 26 times forward earnings, slightly above the S&P 500's 22 times multiple.

"Walmart is a steady, stable long-term holding that is really in all the important areas of retailing — grocery, e-commerce, digitization, AI. This is a company that has really brought itself into the 21st century," Tengler added.

Oppenheimer head of technical analysis Ari Wald is not bullish on the consumer staples — but he does make an exception for stocks such as Walmart and bulk retailer Costco.

"At the industry level, food and staples retailing would be our desired spot for exposure to staples. We think that is the best of the sector," Wald said during the same "Trading Nation" segment. Costco has "been able to move higher in a bull market tape, and we've seen this with Walmart, too. It's trending higher."

Walmart's stock has fallen back 4% from its all-time high. Shares have bounced 45% off its March lows.

Disclosure: Laffer Tengler Investments holds WMT.