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I keep pressing the buy button on Amazon (NASDAQ:AMZN), and the reason is embarrassingly simple: the crowd is looking at the capex line and flinching, while I am looking at what that capex actually builds.
That is the whole thesis in one sentence. Amazon is spending in 2026 to own the compute layer of the AI economy in 2027 and beyond. The market treats the near-term free cash flow squeeze as a wound. I read it as a receipt.
The Three Numbers That Keep Me Buying
Start with AWS. In Q1 2026 it grew 28% year over year, fastest in 15 quarters, on a $150 billion run rate. Jassy said “It is very unusual for a business to grow this fast on a base this large.” Segment operating margin 37.7%, operating income $14.2 billion. That is the engine.
Next, chips. Amazon’s silicon business (Graviton, Trainium, Nitro) topped a $20 billion revenue run rate growing triple digits year over year. Trainium2 is largely sold out. OpenAI committed to roughly 2 GW of Trainium capacity beginning in 2027. Anthropic secured up to 5 GW. AWS backlog sits at $364 billion, and that excludes an Anthropic commitment for over $100 billion.
Third, the whole business prints. Q1 EPS came in at $2.78 versus a $1.653 estimate, a 68.18% beat, the fifth straight beat. Operating income $23.85 billion, up 29.6% YoY. Operating cash flow $26.03 billion, up 52.99%. ROE 22.29%, net debt to EBITDA 0.45, interest coverage 35.17x.
The stock closed at $247.55, up 7.25% YTD, while AMZN slipped 4.7% since the April filing. Analyst target is $312.87 with 62 buys and zero sells.
Why Not the Obvious Alternatives
Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) are the obvious cloud picks. Amazon leads both on custom AI training silicon at Trainium’s scale. Its chip business is over $20 billion run rate with more than $225 billion in revenue commitments and OpenAI plus Anthropic locked in. Jassy: “Trainium will save us tens of billions of dollars of CapEx each year and provide several hundred basis points of operating margin advantage.”
Walmart (NYSE:WMT) is the retail comp. Amazon’s Online Stores grew 12%, third-party sellers 14%, and unit growth hit 15%, the highest since COVID. Walmart does not carry a $150 billion cloud business alongside that.
Meta (NASDAQ:META) is the ad alternative. Amazon’s ad segment ran $17.24 billion in Q1, up 24% YoY, with over $70 billion TTM. One AMZN share buys three growth engines.
The Real Risk
TTM free cash flow fell to $1.2 billion, down 95%. Q1 capex was $44.2 billion; the 2026 plan is roughly $200 billion. Long-term debt climbed to $119.1 billion from $65.6 billion. If AI monetization slips, that overhang stings.
Jassy addressed it directly: data centers carry 30-plus year lives, chips and servers five to six years. I am fine with a compressed FCF year sitting behind $364 billion of backlog.
What Keeps the Buy Button Active
Polymarket assigns 98.5% probability to 2026 capex exceeding $170 billion. Consensus has accepted the number without repricing the outcome. That gap is my window. The five-year base case models $523.92, a 111.64% total return. I keep buying because 2027 will not send an invitation.
The post The Masses Will Ignore Amazon But I Am Me Buying More Now appeared first on 24/7 Wall St..
]]>Walmart (NYSE:WMT) and Procter & Gamble (NYSE:PG) both just delivered results that reveal how two consumer defensive giants navigate the same tariff-heavy backdrop from opposite ends of the aisle.
Walmart owns the shelf and the customer. P&G supplies the brands sitting on that shelf. Comparing their most recent quarters shows why one is accelerating while the other quietly leans on pricing and productivity to hold the line.
Omnichannel Momentum Meets Beauty-Led Defense
Walmart’s Q1 FY27 landed on May 21, 2026 with revenue of $175.68 billion, up 6.08% year over year, and adjusted EPS of $0.66. The real story sits underneath: global eCommerce grew 26% and now represents 23% of total net sales, marketplace sales jumped nearly 50%, and global advertising climbed 37%.
New CEO John Furner emphasized “better shopping experiences, a broader assortment, and faster delivery”, and it shows in 4.1% U.S. comp growth powered by upper-income households.
P&G reported Q3 FY26 on April 24, 2026 with net sales of $21.235 billion, up 7.4%, and core EPS of $1.59. Organic growth was a steadier 3%, with Beauty leading at 7% organic behind Hair Care, Personal Care, and Skin Care. New CEO Shailesh Jejurikar called it “a solid acceleration in top-line results”, though core gross margin still compressed 100 basis points from mix and reinvestment.
| Business Driver | Walmart | P&G |
| Main Growth Engine | eCommerce, ads, marketplace | Beauty and premium innovation |
| Customer Signal | Upper-income share gains | Innovation-based pricing |
| Tariff Response | Absorb via scale | $400M after-tax hit |
Scale Platform vs. Brand Portfolio
Walmart is reinvesting aggressively, with capex up 34% to $6.684 billion, pushing free cash flow to -$1.9 billion in the quarter. That is uncomfortable in isolation, but it funds automation, delivery speed, and a fast-scaling ad engine.
P&G is playing a tighter game: gross productivity savings of 210 basis points, roughly $10 billion in dividends, and $5 billion in buybacks planned for FY26, with guidance now expected toward the lower end.
Walmart trades at a trailing P/E of 40 versus P&G at 21. Investors are paying up for growth on one side and reliability on the other.
What the Next Six Months Will Actually Test
I will keep an eye on whether Walmart’s 8.9% inventory build converts cleanly or signals demand softness, and whether Walmart Connect ad revenue can keep compounding at 44% ex-VIZIO.
For P&G, the question is whether Beauty and Grooming innovation can lift organic growth above the current 3% pace while tariffs stay a $400 million annual weight.
Why I Lean Walmart for Growth, P&G for Sleep-at-Night
Personally, I find Walmart the more interesting business story right now. The 21.82% one-year gain reflects real operating momentum, not just multiple expansion.
If you want a growth-flavored consumer defensive with a scaling ad and marketplace flywheel, WMT fits. That said, I would not fault anyone owning P&G for the 2.89% yield and its 136 years of uninterrupted dividends.
For income-focused investors or anyone bracing for a bumpier tape, the Dividend King still earns its keep. My hesitation on both: Walmart’s valuation leaves little margin for a stumble, and P&G needs volume to reaccelerate before I would upgrade my view.
The post Walmart Bets vs Procter & Gamble: Two Consumer Titans, Two Strategies, One Winner appeared first on 24/7 Wall St..
]]>- Costco (COST) achieved 11.58% revenue growth and 15.19% net income growth in Q3 FY2026, with membership fees rising 10.7% to $1.37B at 89.7% renewal rate.
- Costco's double-digit earnings growth, rising regular dividends, and special-dividend capacity make it ideal for retirement portfolios seeking growing income.
Costco (NASDAQ:COST) stock stands out as one of the strongest setups in the retirement investor’s playbook right now, and the case rests on three numbers that are hard to argue with. The membership economics are hardening, the balance sheet is getting stronger by the quarter, and the growth premium versus the obvious alternative keeps widening. This is a conviction position.
The Membership Machine Is Compounding Faster
Costco posted Q3 FY2026 revenue of $70.53 billion, up 11.58% year over year, with net income climbing 15.19% to $2.19 billion. Membership fees alone reached $1.37 billion, up 10.7%, with a worldwide renewal rate of 89.7% and 75.0% executive-tier penetration. That is annuity-like income growing at a double-digit clip, the kind of cash-flow profile retirement portfolios tend to prize behind an equity position.
Balance Sheet Built for Payouts
Cash and equivalents jumped to $18.95 billion, a 36.93% year-over-year gain, while shareholders’ equity expanded 23.54%. CFO Gary Millerchip signaled that a special dividend remains on the table, noting Costco continues to “generate excess cash beyond those priorities”. Costco has paid special dividends of $15 in 2023, $10 in 2020 and $7 in 2017. The regular quarterly dividend already stepped up to $1.47 in May 2026 from $1.30. Retirees get a growing base payout plus periodic lump-sum surprises.
The Head-to-Head With Walmart Is Not Close
Walmart (NASDAQ:WMT) is the natural comparable, and it loses on the metrics that matter for a compounder. Walmart’s quarterly revenue grew just 7.3% versus Costco’s 11.58%, and quarterly earnings growth was 19.4% against Costco’s 15.19% off a much larger base. Costco’s return on equity is 29.1% versus Walmart’s 24.1%.
Yes, Walmart yields 0.85% to Costco’s 0.57%, but Walmart trades at a forward P/E of 38x versus Costco’s 42x. That is a small premium for meaningfully faster growth and a membership annuity Walmart cannot replicate.
The One Risk, Dismissed
Consumer sentiment sits at 44.8, deep in pessimistic territory. Yet retail sales hit a high of $763.7 billion in May, a 90.9th percentile reading. Costco’s 89.7% renewal rate proves members do not cancel a $130 card when times get tight. They trade down into Kirkland, and Costco captures the wallet share anyway.
For retirement investors seeking a durable compounder with rising income and optional special-dividend upside, Costco around $938 screens as a durable compounder worth research.
The post Costco Is a No-Brainer Buy for Retirement Investors Right Now appeared first on 24/7 Wall St..
]]>Costco (NASDAQ:COST) has been one of the most crowded long trades in consumer retail for years. After a choppy first half of 2026, the question is whether the warehouse giant still has room to run.
My model says yes, but only modestly. Costco traded at $945.57 as of the last close, and the 24/7 Wall St. price target for Costco is $1,041.86, implying 10.18% upside over the next 12 months. The model’s rating is buy, and confidence is high at 90%.
| Metric | Value |
|---|---|
| Current Price | $945.57 |
| 24/7 Wall St. Price Target | $1,041.86 |
| Upside | 10.18% |
| Recommendation | BUY |
| Confidence Level | 90% |
What the Recent Price Action Is Telling Us
Costco is up 9.96% year to date but has cooled recently, falling 4.17% over the past month after touching a 52-week high of $1,096.50. The 52-week low sits at $841.69, so shares trade in the upper half of that range.
In fiscal Q3 2026, Costco delivered EPS of $4.93 on revenue of $70.53 billion, up 11.6% year over year, with comparable sales up 9.8%, digital comps up 21.5%, and membership fee income of $1.373 billion. The worldwide renewal rate held at 89.7%.
Why Bulls See a Breakout Ahead
The bull case rests on the flywheel. Membership fee income compounds above 10% annually, executive members represent 75% of net sales, and e-commerce traffic jumped 37% last quarter. Costco plans to end fiscal 2026 with roughly 940 warehouses, up from 914, and free cash flow reached $7.84 billion in fiscal 2025.
Consumer spending on food rose to $1,566.8 billion in May 2026 from $1,518.3 billion a year earlier, and Goldman Sachs calls out Costco as capturing outsized share through value offerings, operational leverage, and effective supplier negotiations. If digital growth holds above 20% and membership economics expand, our bull scenario pushes shares to $1,139.55, a 20.51% return.
What Could Go Wrong
Costco trades at a trailing P/E of 46x and forward P/E of 41x, an unforgiving multiple if growth decelerates. Management flags tariff exposure, FX headwinds, and rising healthcare and wage costs as active risks.
Recent insider activity leaned toward selling, and 30-day sentiment slipped 13.44 points. The recent PEG of 4.518 reflects heavy reinvestment in Kirkland innovation, international warehouses, and digital infrastructure. The bear scenario limits downside to $956.56, essentially flat.
How Costco Compares to Walmart and BJ’s Wholesale
Walmart (NYSE:WMT) trades at $114.95 against an implied P/E of 42x and forward EPS of $2.94, with 86% of analysts bullish and quarterly earnings growth of 19.4%. Walmart is cheaper on forward earnings than Costco but grows earnings roughly half as fast, supporting Costco’s premium.
BJ’s Wholesale Club (NYSE:BJ) is the closest pure-play comparison. BJ posted Q1 fiscal 2027 EPS of $1.10 on revenue of $5.66 billion with full-year adjusted EPS guidance of $4.40 to $4.60, digital comps up 28%, and a market cap of $11.88 billion. Membership fee growth of 9.9% trails Costco’s, and net income fell 4.7%. Against that field, our $1,041.86 target looks reasonable.
Costco Price Prediction 2026-2030
The 24/7 Wall St. price target of $1,041.86 and buy rating reflect durable membership economics, accelerating digital growth, and a resilient consumer backdrop. Valuation keeps me from pounding the table.
The setup improves if Costco pulls back toward the 200-day average near $956 or delivers another double-digit comp quarter. Risk rises if the multiple pushes above 50x on decelerating traffic. Confidence remains 90%, and the target still points higher.
Here is where our model projects Costco could trade, assuming steady mid-single-digit comp growth and consistent membership expansion.
| Year | 24/7 Wall St. Price Target |
|---|---|
| 2026 | $1,041.86 |
| 2027 | $1,117.75 |
| 2028 | $1,197.90 |
| 2029 | $1,270.11 |
| 2030 | $1,349.80 |
These projections assume Costco executes on warehouse expansion, membership growth, and Kirkland Signature innovation. Significant upside or downside could result from tariff policy shifts, consumer slowdown, or accelerating international rollout.
The post Price Prediction: Will Costco Hit a New-High This Year? appeared first on 24/7 Wall St..
]]>I keep hitting the buy button on Amazon (NASDAQ:AMZN), and the $25 billion bond sale gave me three fresh reasons to keep going. I have owned this stock for years, and every time management pulls a lever this obvious, I add. The market treated the debt raise like a warning. I read it like a receipt.
The Cost of Capital Arbitrage I Keep Waiting For
The 10-year Treasury sits at 4.55%, in the 94th percentile of the past 12 months. That yield looks rich in a vacuum, yet Amazon’s interest coverage ratio is 35.17x, which means the company can absorb this coupon in its sleep. Peak demand on the offering hit $62 billion, 2.48 times oversubscribed, across eight tranches maturing from 2029 to 2066. Institutional buyers effectively fought each other to hand Amazon 40-year money. That preserves the $101.82 billion of cash on the balance sheet for acquisitions, chip design, and whatever Andy Jassy sees next. Debt funds the concrete. Cash stays weaponized.
The Capex Is Already Pre-Sold
This is where I get loud with friends who think Amazon is overspending. The roughly $200 billion 2026 capex plan funds physical data center capacity backed by AWS’s $364 billion commercial backlog. AWS grew 28% year over year in Q1, the fastest in 15 quarters, at a 37.7% operating margin. Anthropic is contracted for up to 5 GW of Trainium capacity. OpenAI committed roughly 2 GW starting 2027. Project Rainier is deploying 500,000-plus Trainium2 chips. The chips business already runs at a $20 billion annual revenue rate, growing triple digits. The bonds pay for buildings that are already leased in economic terms.
Peak Debt, Then the Runway Clears
Management framing this as the final debt tap of the year removes an overhang I was already discounting. Operating cash flow hit $139.51 billion in 2025 against $131.82 billion of capex. Debt-to-assets improved from 30.3% in 2022 to 18.7% in 2025 even while the asset base doubled. Once capex intensity normalizes, free cash flow snaps back and the multiple has room to breathe.
Why Amazon, Not Microsoft or Alphabet
I looked hard at Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL). Both are quality. Neither has the same operating leverage story from here. Amazon’s North America retail margin expanded to 7.9% from 6.3%, international operating income grew 40%, and Q1 EPS of $2.78 beat the $1.73 consensus by 60.69%. That is a fifth consecutive beat. I also passed on Walmart (NYSE:WMT) because retail alone cannot compound against a business where advertising just crossed $70 billion in trailing revenue growing 24%. Amazon pays no dividend, and that suits me. Every retained dollar funds Trainium, robotics, and Leo satellites.
The Risk I Own Openly
Free cash flow collapsed. TTM free cash flow fell 95% to $1.2 billion as property and equipment purchases jumped $59.3 billion year over year. If AWS demand ever wavers, that capex looks foolish. I keep buying because the $364 billion backlog is contractual, the Bedrock platform processed more tokens in Q1 than in all prior years combined, and interest coverage of 35x leaves room for a bad year.
Analysts carry a $314.35 average target against my $249.89 cost basis today. That gap is my margin of safety, and the bond sale just financed the growth that closes it. My buy button stays warm.
The post Amazon’s $25 Billion Bond Sale Created 3 More Reasons for Me to Keep Buying appeared first on 24/7 Wall St..
]]>July is off to a jittery start. The VIX closed at 17.16 on July 13, up 14.2% in a single session and 10.2% for the week. The 10-year to 2-year Treasury spread sits at just 0.36%, in the 5.6th percentile of the past 12 months. University of Michigan Consumer Sentiment printed 44.8 in May, down from 61.7 last July and approaching the sub-60 recessionary zone.
The Sahm Rule is not flashing red and was sitting at 0.07 in June, well below the 0.50 recession trigger, so this is a positioning trade rather than a crisis hedge. Three U.S.-listed defensives fit the moment: Walmart (NYSE:WMT) in staples retail, Duke Energy (NYSE:DUK) in regulated power and McDonald’s (NYSE:MCD) in global quick-service restaurants. Each carries a coherent bull case and a risk investors should not overlook.
Walmart (WMT)
Walmart is the cleanest way to play trade-down behavior when household budgets tighten. Q1 FY27 delivered Adj EPS of $0.66 on revenue of $175.68B, up 6.1% year over year, with global eCommerce sales up 26% and U.S. comps up 4.1% ex-fuel. Management is taking share across income tiers, including upper-income households. Higher-margin ancillaries are compounding fast: global advertising rose 37% and membership fees rose 17.4%.
The capital return story is stiffening. Walmart raised its quarterly payout to 24 cents for 2026, up from 23 cents in 2025 and 20 cents in 2024, and authorized a new $30 billion buyback in February with $28.2 billion remaining. As of July 15, shares are up 19.58% over the past year despite a 5.59% one-month pullback, which has created a cleaner entry.
Risk: valuation is not cheap at a P/E of 42, and fuel costs are running as a ~250bps operating income headwind with inventory up 8.9%. Tariff and IEEPA uncertainty can compress guidance in a hurry.
Duke Energy (DUK)
Duke Energy is the least correlated name on this list to the AI hype cycle, yet it is a direct beneficiary of it through power demand. Q1 2026 marked a fourth consecutive earnings beat, with adjusted EPS of $1.93 topping the $1.7951 estimate by 7.51% and revenue of $9.18 billion up 11.3%. Management reaffirmed 2026 Adj EPS guidance of $6.55 to $6.80 and pointed to long-term growth of 5% to 7% through 2030, with confidence in the top half beginning 2028.
The setup rests on a $103 billion five-year capital plan driving 9.6% earnings base growth and 7.6 GW of economic development projects secured under Electric Service Agreements tied to data center and advanced manufacturing demand. As of July 15, shares are up 7.89% year to date. The trailing 12-month dividend of $4.6116 reflects a payer that has never skipped a quarterly distribution in the dataset.
Risk: rising interest expense weighs on capital-intensive utilities, and industrial electric sales fell 2.1% year over year. If contracted data center load ramps slower than the capex schedule assumes, the earnings algorithm gets stress-tested.
McDonald’s (MCD)
McDonald’s is the contrarian pick. As of July 15, shares are down 11.14% year to date and 10.06% over the past year, sitting well below the 52-week high of $337.56 and the analyst target of $328.87. That is the setup, not the thesis.
The fundamentals turned in Q1. Global comparable sales rose 3.8% versus -1.0% a year ago, with U.S. comps up 3.9% and all segments positive. Loyalty is now a genuine moat: systemwide sales to members exceeded $9 billion in the quarter and topped $38B on a trailing 12-month basis across 70 markets. Revenue of $6.52B was up 9.4%, and management guided to operating margin in the mid-to-high 40% range.
Income investors get paid to wait. The quarterly dividend was raised to $1.86 in Q4 2025, up from $1.77, extending a growth streak that has taken the annual payout from $0.77 quarterly in 2013 to $1.86 in 2026. Beta of 0.418 means the name should hold up if the VIX pushes higher. Analyst positioning skews constructive with 14 Buy ratings and five Strong Buy ratings against one Sell rating.
Risk: the effective tax rate rose to 22.0% from 19.8%, restructuring charges run through 2027, and international markets carry geopolitical and anti-American sentiment exposure that a value menu cannot fix.
What to Watch Next
The through-line is cash flow that shows up whether the S&P is green or red. Walmart is the trade-down lever, Duke Energy is the rate-base compounder with an AI kicker and McDonald’s is the loyalty-driven dividend grower trading at a discount to its own history. If July gets ugly, keep an eye on Walmart’s Q2 report and the next VIX reading above 20 as signals that defensives are being priced correctly rather than as a crowded trade.
The post 3 Stocks to Own When the Market Gets Ugly in July appeared first on 24/7 Wall St..
]]>Walmart (NYSE:WMT) and Johnson & Johnson (NYSE:JNJ) just delivered results that show two defensive giants pulling on very different levers.
Walmart posted $175.68 billion in Q1 FY27 revenue with omnichannel firing on all cylinders. J&J leaned on its pharma pipeline to grow Q1 2026 sales 9.9%. Both beat estimates. The playbooks could hardly look more different.
Retail Flywheel Meets Pharma Firepower
Walmart’s quarter was a story of stickiness turning into leverage. U.S. comp sales rose 4.1% ex-fuel on 3.0% transaction growth, and global eCommerce jumped 26%, now 23% of sales. Advertising climbed 37%, and marketplace sales surged nearly 50%, the best in ten quarters.
Upper-income households keep trading in, and CEO John Furner credited “innovative technologies, driving productivity through automation, and growing higher-margin commerce solutions.” Free cash flow turned negative at -$1.95 billion as capex jumped 34%. That signals investment in future throughput capacity.
J&J’s engine ran on drugs. Innovative Medicine rose 11.2% to $15.43 billion, with DARZALEX at $3.96 billion (+22.5%) and TREMFYA up 68.3%, absorbing the STELARA biosimilar shock. MedTech added 7.7%, led by cardiovascular. CEO Joaquin Duato called the pipeline “unrivaled,” pointing to fresh approvals like ICOTYDE and VARIPULSE Pro.
One Widens The Store. One Prunes The Portfolio.
| Lens | Walmart | J&J |
| Core Bet | Omnichannel + ads | Oncology and immunology drugs |
| Growth Engine | eCommerce +26% | TREMFYA +68.3% |
| Key Vulnerability | Tariffs, fuel (250 bps hit) | STELARA erosion (-59.7%) |
| Capital Move | New $30B buyback | 64th straight dividend hike |
Walmart is widening: more delivery, more marketplace sellers, more ad inventory through VIZIO.
J&J is narrowing, planning a DePuy Synthes orthopaedics spinoff within 18 to 24 months and pouring over $1 billion into cell therapy manufacturing. Different visions of defense.
The Next Test Is Whether Consumers Hold Up
With University of Michigan consumer sentiment at 44.8, near recessionary territory, I want to see whether Walmart’s upper-income share gains survive a broader pullback.
J&J faces a nearer catalyst: prediction markets currently price a 92.5% probability of a Q2 EPS beat, with Innovative Medicine consensus clustering around $16.2 to $16.65 billion. Guidance was already raised to $11.45 to $11.65 adjusted EPS for the year.
Why I Lean Toward J&J At These Prices
Both are quality. You are paying very differently for them.
Walmart trades at a trailing P/E of 40 with a 0.85% yield, while J&J sits near 30 with a 2.01% yield and 21.8% profit margins versus Walmart’s 3.14%.
J&J shares are already up 25.56% year to date, and I still find the pipeline math more compelling than paying 39 times forward earnings for a retailer with negative free cash flow this quarter. Walmart offers brand-driven compounding for investors patient with tariff noise. J&J’s combination of yield, margins, and pipeline stands out at these valuations.
The post Walmart vs Johnson & Johnson: Two Defensive Plays, Diverging Strategies and One Winner appeared first on 24/7 Wall St..
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- Jim Cramer recommends Dollar General (DG) as a hedge fund favorite that benefits when rising energy prices squeeze consumer budgets and drive trade-down behavior into discount.
- Dollar General's Q1 beat expectations with $2.00 EPS vs $1.88 consensus, same-store sales up 2.0%, and management raised FY2026 guidance to $7.20-$7.45 amid margin expansion.
- Walmart (WMT) is the validation to watch: if discounter rotation broadens into general merchandise, the trade shifts from tactical position to durable defensive theme for H2 2026.
Jim Cramer used his Monday CNBC Stop Trading segment to flag a familiar play he’s seeing coming back into focus. Cramer noted that when the cost of living squeezes household budgets, capital rotates into discount retailers, and the hedge fund crowd tends to get there first. That’s why he says he’s keeping an eye on Dollar General (NYSE:DG).
Why Rising Gas Prices Send Hedge Funds Into Dollar General
Jim Cramer bluntly connected the dots he sees between rising oil prices and soaring discount retailer performance. “When things go up for the consumer, we go back to these stocks,” he said, before laying out his trade idea: “Dollar General just is a favorite of the hedge fund crowd. It’s kind of an algorithm that says, oh, oil goes up, gasoline therefore goes up, go buy Dollar General.”
He also pointed to Dollar Tree’s upgrade last week, which he said drove the stock from $85 to $130 in a couple of months, and flagged Walmart as the validation to watch: “I’m waiting for it to impact Walmart, which is a big winner.”
The Consumer Squeeze Is Reviving the Trade-Down Economy
WTI crude sits at above $78 per barrel, well off the 12-month high of $114.58 on April 7, 2026, and the U.S. regular gasoline average has eased to $3.78 per gallon. But retail pump prices spent much of the spring above $4.50, and University of Michigan consumer sentiment collapsed to 44.8 in May 2026, approaching recessionary levels. Trade-down behavior into value shopping is exactly what that combination could produce.
Dollar General’s Q1 FY2027 report filed on June 2, mapped directly onto Cramer’s thesis. Diluted EPS came in at $2.00 versus $1.88 consensus, revenue was $10.79 billion, same-store sales rose 2.0%, and gross margin expanded 65 basis points to 31.6%.
CEO Todd Vasos said results “exceeded our expectations as strong operating margin expansion more than offset the impact of severe winter weather and higher fuel costs.” Management then raised FY2026 EPS guidance to $7.20-$7.45.
Dollar General has climbed 8.7% over the past month and was up 4.73% on the day of Cramer’s segment, trading at $124.55. Shares still carry a modest trailing P/E ratio of 17.
Dollar Tree, Walmart, and Five Below As Other Potential Beneficiaries
Dollar Tree (NASDAQ:DLTR) is up 13.23% over the past month. Q1 delivered adjusted EPS of $1.74 versus $1.55 consensus on revenue of $4.98 billion, and management raised the FY26 range to $6.70 to $7.10.
Walmart (NYSE:WMT) reported Q1 FY2027 results showing Walmart U.S. comps up 4.1% ex-fuel and global e-commerce up 26%, with share gains skewing towards upper-income demographics. Walmart trades at a P/E near 41, and shares are down 5.55% over the past month.
Five Below (NASDAQ:FIVE) reported Q1 net sales growth of 32.5% and comparable-store sales growth of 22.7%, with FY26 EPS guidance of $8.65 to $9.05. Shares are up 45.48% over the past year.
What to Watch Next
Cramer’s broader argument is that rising household costs could push more consumers toward discount retailers, benefiting Dollar General, Dollar Tree, Walmart, and Five Below. Dollar General’s improving margins and raised earnings guidance suggest that shift may already be underway.
If Walmart’s upcoming results show stronger trade-down activity, the trend could be developing into a broader defensive investment theme rather than a short-term hedge fund trade.
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]]>Walmart (NYSE:WMT) and Costco (NASDAQ:COST) both posted fresh quarters reinforcing their status as safe havens, but the underlying businesses are pulling in different directions. Walmart leaned on automation, advertising, and marketplace scale. Costco leaned on membership renewals and Kirkland. With consumers guarded on discretionary goods, the comparison feels sharper than usual.
Automation Lifts Walmart. Memberships Steady Costco.
Walmart’s Q1 FY27 revenue reached $175.68 billion, up 6.1% year over year, with global eCommerce climbing 26% and advertising revenue up 37%. CEO John Furner framed it plainly: “Our teams are adopting innovative technologies, driving productivity through automation, and growing higher-margin commerce solutions.” Marketplace sales jumped nearly 50%, the best in 10 quarters, and general merchandise share gains were the strongest in five years, notably among upper-income households.
Costco’s Q3 FY26 revenue hit $70.53 billion, up 11.58% year over year, with comparable sales of +9.8% and digitally-enabled comps +21.5%. Membership fees rose 10.7%, and worldwide renewals held at 89.7%. The digital story centers on personalized carousels and mobile ordering, staying short of enterprise AI.
| Business Driver | Walmart | Costco |
| Main Growth Engine | eCommerce, ads, marketplace | Membership fees, Kirkland |
| Automation Depth | ~50% eComm FC volume automated | Push notifications, Pre-Scan rollout |
| Comp Momentum | +4.1% U.S. ex-fuel | +6.6% adj |
One Retailer Is Rebuilding Its Cost Base. The Other Is Optimizing.
Walmart is spending hard to convert scale into structural margin. Roughly 60% of stores now receive automated freight, and the VIZIO acquisition is turning connected TV into an advertising platform. Capex ran $6.68 billion in Q1, up 34% YoY, which pushed free cash flow negative. The AI-fueled ad and marketplace flywheel is a genuine margin lever.
Costco’s model is more surgical. Plans call for ~12 new warehouses and 940 total by year-end FY26, with Kirkland price cuts on select items. The tech playbook feels narrower.
The Next Test Is Whether AI Actually Widens Margins
I want to see Walmart Connect keep compounding and marketplace mix keep lifting general merchandise gross rate. On Costco, I am watching whether renewal rates stay near 90% now that pricing has crept higher. Valuation matters: WMT trades at 37x forward earnings versus Costco at 41x. Neither is cheap.
Why I Lean Toward Walmart for This Cycle
On the current setup, Walmart looks like the more compelling story. The Gemini partnership and algorithmic fulfillment cost frameworks give it a credible path to expanding 4.18% operating margins on a $713 billion revenue base. Costco remains a fortress with renewal-driven predictability that appeals to defensive-minded readers. The AI-powered advertising and automation flywheel at Walmart is the more interesting margin story into 2027, especially with 37 buy ratings versus 1 sell backing the thesis. I would reconsider if tariff refunds slip or inventory keeps building.
The post Walmart Vs. Costco: Buy Walmart Over Costco for Defensive Coverage and AI Integration Superiority appeared first on 24/7 Wall St..
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- Claiming Social Security at 62 vs 67 reduces Diane's $2,000 monthly benefit to ~$1,400, costing $7,200+ yearly with smaller cost-of-living adjustments.
- Walmart (WMT) shoppers facing inflation should delay claiming; each year past 62 adds 8% permanently; earning above $23,400 before full retirement age forfeits $1 per $2 earned.
In early July 2026, Walmart (NYSE:WMT) made headlines by revealing it would be trimming prices on a batch of grocery and household staples, including double-digit cuts on ground beef and price drops of more than a third on multipacks of Coca-Cola. The takeaway for shoppers was simple: prices are the focus right now. For retirees, though, a modest cut on cereal or laundry detergent does not undo the squeeze. It also does not answer the harder question many are quietly asking themselves at the kitchen table: should I just turn on Social Security at 62 and be done with it?
The Squeeze Is Real, and It Is Pushing People to Claim Early
Consider a woman, 62, widowed, working part-time, watching her grocery bill creep up while her savings account earns less than her utility bill. She is simply tired. On a retirement forum recently, a member in almost exactly her spot asked whether there was any “meaningful reason” to wait past 62, or whether claiming now just made sense.
The numbers behind that feeling are not imagined. University of Michigan consumer sentiment fell to 44.8 in May 2026, deep in pessimistic territory. Headline PCE inflation ran at about 4% in the 12 months leading up to May, with services inflation and energy prices soaring from a year earlier. The personal savings rate has slipped to 3.0%, a four-year low.
A retailer as large as Walmart cutting prices on thousands of items is a real, if partial, offset. It is also a signal in itself: the nation’s biggest grocer does not slash prices this broadly unless it is responding to a household budget that is already stretched thin. That is the world our retiree is deciding in.
The One Number That Actually Drives This Decision
Here is the mechanic that matters more than anything else: for anyone born in 1960 or later, Full Retirement Age (FRA) is 67, and claiming at 62 permanently cuts the monthly check by roughly 30%. Going the other direction, every year you delay past FRA to 70 adds about 8%.
Put that in dollars. If Diane’s benefit at 67 would be $2,000 a month, claiming at 62 locks her in near $1,400. That is roughly $600 a month, more than $7,000 a year, erased for the rest of her life. If she lives to 87, that is a quarter century of a smaller check.
Now layer the cost-of-living adjustment (COLA) on top. The 2026 COLA came in at 2.8%. Cost-of-living adjustments are percentages, so they apply to whatever base you locked in. A 2.8% raise on $1,400 is smaller in dollars than a 2.8% raise on $2,0