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Buy Target and Walmart Stock Before Q1 Earnings?

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On today’s episode of Full Court Finance at Zacks we dive into the broader market after a volatile week, driven by inflation fears. The episode then explores Walmart (WMT - Free Report) and Target (TGT - Free Report) ahead of their upcoming earnings releases to see if investors should consider either of the retail stocks as long-term buy and hold candidates.

The S&P 500 and the Dow bounced back from their roughest three-day stretch since October to end last week on a positive note. The Nasdaq also jumped to stop some of the bleeding that had pushed the tech-heavy index down 8% from its late April records. The selling, which came back Monday, was sparked by inflation concerns after April’s consumer-price index jumped 4.2%.

The climb represented the largest 12-month jump since the summer of 2008 and topped expectations. The selling is caused by fear the Fed might raise interest rates to tamp down rising prices. But the Fed remains steadfast that inflation will be “transitory” and retreat later this year since current prices are compared against the early shock of the coronavirus. And even if rates rise, they will likely remain historically low.

The rise in prices has been driven by the U.S. economic resurgence that could see GDP grow by 6.5% this year, along with easy-money policies, and government checks.

April retail sales were flat from March. That still means spending was strong, given March’s growth was upwardly revised to 10.7%, driven by stimulus checks. Consumers are diving back into some of the hardest-hit areas of the economy as the reopening continues.

The week of May 17 features earnings reports from some of the big retailers in the U.S., including Home Depot (HD - Free Report) , Lowe’s (LOW - Free Report) , Macy’s (M - Free Report) , TJX (TJX - Free Report) , and of course Walmart and Target.

Walmart stock is down 8% from its late 2020 records heading into its first quarter FY22 financial release on Tuesday, May 18. Walmart pushed deeper into e-commerce well before the pandemic as it tried to keep pace with Amazon (AMZN - Free Report) and it has continued to dive into new spaces from digital advertising to telehealth.

Target’s same-day e-commerce offerings, coupled with its on-trend and affordable fashion, home décor, furniture, food, and more helped it shine during the pandemic. And many of TGT’s other fundamentals appear solid ahead of its Q1 FY21 earnings release on Wednesday, May 19.

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