Is Walmart A Safe Play Ahead Of Earnings? These 2 Pros Say Yes

Retail stocks as a group have rebounded sharply from their October lows, but not enough to recapture multiyear highs.

With the earnings season for the retail group approaching, should investors expect to see more gains or sell into the print?

The Analysts

Over the past few weeks, investors exchanged their high valuation stocks in favor of "very reasonably" priced alternatives, especially retail stocks, Gradient Investments President Mike Binger said during a recent CNBC "Trading Nation" segment.

Retail stocks — especially those with a domestic focus and less exposure to Chinese imports — are beneficiaries of a stronger U.S. dollar, he said. 

As a whole retail looks like a "safe, defensive sector" at a time when consumer data is encouraging but some industrial metrics have "fallen off," Binger said. Investors looking for specific names should consider Walmart Inc (NYSE: WMT), as the company is "executing very well," especially online, he said. 

Piper Jaffray Chief Market Technician Craig Johnson said he agrees with the bullish case for Walmart's stock.

From a technical point of view, Walmart's chart dating back to late 2017 shows a "nice cup-and-handle pattern forming," with upside potential to $110 per share, he said — or a total return close to 10 percent.

Walmart is scheduled to report third-quarter results before the market open Nov. 15.

Price Action

Walmart shares were 0.41 percent higher at $103.75 at the time of publication Wednesday. 

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Photo by MikeMozartJeepersMedia/Wikimedia.