The Walmart Stock Seen Rising Short Term
Walmart Inc.Shares of (WMT) have had a horrible 2018, with shares down almost 13% so far, while also more than 20% off their highs. But all that may be changing in the coming weeks, based on an analysis of the technical chart, with the potential for stocks to gain around 9%. A change would be an achievement for the Bulls.
Not only do the charts suggest that stocks will rise, but option traders are also betting that stocks will rise in the short term as well. However, the longer-term outlook may still be in question, as earnings and revenue growth are expected to remain lukewarm in the coming years.
The technical chart suggests that Walmart is about to rise 9% from its current price of around.86. The chart shows a technical pattern called triple bottom, a bullish reversal pattern. In addition, the stock is approaching a significant technical resistance level at $ 88.20, and if the shares can rise above that resistance price, it would have room to climb as high as $ 93.50, rising about 9%. (For more information, see ALSO: Walmart Stock could be set up for Major Rally.)
In addition, the Relative Strength Index has been in constant upward trend, even with stocks trading sideways from April to mid-June, a bullish divergence. I would suggest that momentum is moving towards action. In addition, volume levels have steadily increased, indicating that purchase interest is also increasing.
Option traders have been active on calls that will expire on July 20 at strike prices of $ 90 and 9 93. The open interest for the ejercicio 90 strike price has increased to more than 24,000 open contracts. With llamadas 90 calls trading at about aproximadamente 0.25 per contract, a buyer would need the stock price to rise to $ 90.25 to reach breakeven if held to maturity, an increase of about 5%.
But any increase in stock can only become short-term in nature, with multiple current earnings trading at more than double the rate of earnings growth. Analysts see earnings for fiscal year 2019 rising by only 8.7%, but are currently valued at nearly 18 times estimates of $ 4.81 per share, giving the stock a PEG ratio of about 2.1, making the stock expensive. (For more information, see ALSO: Walmart Inks Deal With Postmates for Deliveries.)
The outlook does not improve much for the company going forward, as profit growth is expected to slow in FY 2020 to 3.8%, with revenue growth of 3%.
Walmart shares may take a break in the short term and see its shares rise, but it seems unlikely at this point that the gains will be sustainable.