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Walmart- The Logistics Kingmaker for your Portfolio

Walmart, the nation’s giant brick motor retailer, is the undisputed king of logistics in the US Economy. Now there will be those who will say what about UPS, FedEx, or DHL? One word— market share. Walmart owes a great deal of its corporate success story to one of the largest logistics systems in the world that are privately owned.


Logistical Private Empire- An extensive network of stores and warehouses to dominate next-generation consumer package deliveries.        

Consistent Fundamentals- One of the largest companies that have consistently generated profit despite the global pandemic and supply chain crisis.

Strong Fundamental – In Logistics

Walmart has 10,585 stores, including Sam’s Club, in America alone. To ensure those stores have stocked shelves, Walmart has 210 distribution centers. These distribution centers served as a hub and spoke logistical model, similar to how airlines operate. Think of Delta’s Atlanta Hub or Chicago for United. Walmart has 9,000 semi-trucks that they own, and this figure does not include the contracted fleets that Walmart can use to fulfill its transportation needs. According to Walmart, each distribution center has more than 1 million square feet of warehouse space, equivalent to roughly 21 football fields. More importantly, each distribution center supports 90 to 100 stores within a 150+ mile radius. More details on why that geography is critical later.

Walmart has been in business since 1962. Why is that year important for today’s investing? They had to move products during the 1973 Oil Embargo. For our younger users, you had odd-even days when you could come by gasoline. That oil embargo caused the price of oil to quadruple. Oil went from $2.90 a barrel to $11.65 a barrel in January 1974. (Federal Reserve) The other oil crises Walmart has operated through are Gulf War and the 2003-2007 oil spike. Walmart is well-positioned to deal with the volatile oil market that will persist for the next few years. 

Strong Fundamentals- In Financials Walmart has shown strong financials, even with the historic global logistical crisis. Walmart has made consistent profits since the start of the pandemic and, thus, the logistical constraints. Last Quarter Walmart Generated a Gross Profit of $34.72 Billion (4/30/22). However, that profit was down $2.63 billion from the previous quarter, when Walmart brought in $37.35 Billion (1/31/22), which is where we saw last month’s dip. We also saw the first record inflation report in nearly 40 years in May. The drop in stock price in large part to Walmart missing revenue expectations. They still were able to generate profit. However, with that being said, people will still need to buy everyday goods, and Walmart is well-positioned to be the biggest, if not the only, player in towns all across the United States. In these volatile times, being able to make a profit consistently is a superpower. 

Next Generation Shipping- Drone Delivery 

Walmart is teaming up with DroneUp to expand the delivery services to their customers. The program will start in Arizona, Arkansas, Florida, Texas, Utah, and Virginia for 34 sites. Walmart announced that the drone has the potential to reach up to 4 million US households. In addition, the drones can deliver up to 1 million packages by the end of the year.  

Walmart gave a broad statement about what products would be able to, up to 10 pounds. The drones will be a unique value-added product to customers in an area where Walmart already has a large footprint—prescription drugs.  

Walmart’s pharmacies are currently in the top five pharmacies in the United States. (Becker’s Hospital Review). As mentioned earlier, one of the current problems, but also an opportunity, is a physics problem. Drones need to ship a high-value product that is lightweight—the perfect high-value and low-weight pharmaceutical products, which Walmart will use to master the drone delivery business. 

The next generation in customer delivery is the ability to deliver a product in under two hours. Amazon and Walmart are both competing to make this happen. However, Walmart has the logistical backbone to be the first company to make this reality. 

A stock price, although necessary, doesn’t tell you all the information an investor needs. First, you need the share count, which you have to be a subscriber. The share count allows you to concentrate and focus on your position. The right portfolio strengthens and grows your capital, with our portfolio reducing single stock risk.

The market changes daily; why shouldn’t your portfolio.  To Freedom and Capitalism, ETF Stock Report.

Posted: June 29, 2022

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