WMT: 3 Retail Stocks Set To Thrive in 2025 and Beyond

The retail industry is poised for a transformation in 2025, driven by technological advancements and shifting consumer preferences. Therefore, investors might consider adding three fundamentally strong retail stocks, Casey’s General Stores, Inc. (CASY), Walmart Inc. (WMT), and The Kroger Co. (KR), to their portfolio in this modern consumer-oriented world.

In today’s retail world, emerging technologies like AI and automation further enhance operational efficiency and customer engagement. Also, 58% of retailers use generative AI to create assets for ads, emails, social media, and websites, which helps create personalized and targeted marketing messages more efficiently.

Moreover, retailers are deploying AI-enhanced tools such as summaries of product reviews, chatbots, and shopping assistants in an effort to facilitate purchase decisions, reduce friction, and increase conversion. Such adaption and integration of technology leverages data analytics to predict trends and also enhances customer satisfaction.

The global food and grocery retail market is anticipated to reach $14.78 trillion by 2030, exhibiting a CAGR of 3.2%.

Now, let us dive deep into the fundamentals of the above-mentioned three Grocery/Big Box Retailers stocks, beginning with the third:

Stock #3: Casey’s General Stores, Inc. (CASY)

CASY is a prominent convenience retailer and pizza chain in the United States. Operating over 2,600 locations under the names Casey’s and Casey’s General Store across 17 states, the company offers a range of products, including pizza, donuts, breakfast items, sandwiches, and tobacco and nicotine products.

On November 5, CASY announced the completion of the acquisition of Fikes Wholesale, owner of CEFCO Convenience Stores. This acquisition will bring 148 stores in Texas and 50 stores in southern states, bringing the total CASY store count to approximately 2900 stores, which helps the company to expand its reach in every state of the United States.

3 STOCKS TO DOUBLE THIS YEAR

CASY’s trailing-12-month ROCE and ROTA of 17.16% and 6.93% are 61.5% and 78.9% higher than their respective industry averages of 10.63% and 3.87%. Likewise, its trailing-12-month asset turnover ratio of 2.15x is 147.6% above the industry average of 0.87x.

In the fiscal second quarter that ended on October 31, 2024, CASY’s total revenue amounted to $3.95 billion. The company reported an adjusted EBITDA of $348.88 million, indicating a 14.1% growth from the prior year quarter. Its net income came in at $180.92 million, up 13.9% year-over-year, while its earnings per share grew 14.4% from the prior-year quarter to $4.85.

As per the fiscal year 2025 outlook, CASY projects an EBITDA growth of at least 10%. The company plans to expand its footprint by adding approximately 270 stores through mergers & acquisitions and new store construction. Additionally, CASY forecasts inside same-store sales to increase by 3% to 5%, with inside margins consistent with fiscal 2024.

Street expects CASY’s revenue for the fiscal fourth quarter (ending April 2025) to increase 8.3% year-over-year to $3.90 billion. Its EPS for the same period is expected to register a 4.6% growth from the prior year, settling at $2.45. In addition, it surpassed the EPS estimates in each of the trailing four quarters, which is promising.

CASY shares have surged 36.9% over the past year and 24.8% over the past nine months to close the last trading session at $390.84.

CASY’s POWR Ratings reflect this robust outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

CASY has a B grade for Quality. It is ranked #20 out of the 36 stocks in the A-rated Grocery/Big Box Retailers industry. Click here to see the additional ratings for CASY (Growth, Value, Momentum, Stability, and Sentiment).

Stock #2: Walmart Inc. (WMT)

WMT is a technology-powered omnichannel retailer that engages in the operation of retail, wholesale, other units, and e-commerce worldwide. The company functions as supercenters, supermarkets, hypermarkets, warehouse clubs, and cash and carry stores. It operates through three segments: Walmart U.S.; Walmart International; and Sam’s Club.

On December 3, WMT completed the acquisition of VIZIO. This acquisition should allow WMT to use VIZIO’s SmartCast Operating System, enhancing customers’ shopping journeys and serving them in new ways. It should help connect customers at scale and boost product discovery.

The stock’s trailing-12-month ROCE of 23.48% is 120.9% higher than the industry average of 10.63%. Similarly, its 7.47% trailing-12-month ROTA is 92.9% above the industry average of 3.87%. Also, its trailing-12-month asset turnover ratio of 2.58x compares favorably to the industry average of 0.87x.

During the fiscal third quarter, which ended on October 31, 2024, WMT’s total revenue increased by 5.5% year-over-year to $169.59 billion. The company reported an operating income of $6.71 billion, indicating 8.2% growth from the prior year’s quarter. WMT’s attributable net income stood at $4.58 billion, up 910.4% year-over-year, while its EPS grew 850% from the year-ago value to $0.57.

According to the company’s updated fiscal year 2025 guidance, WMT expects consolidated net sales growth of 4.8% to 5.1%. Its consolidated adj. operating income is expected to increase 8.5% – 9.3%. The company’s adjusted EPS is set in the range of $2.42 to $2.47.

The consensus revenue estimate of $178.68 billion for the fiscal fourth quarter (ending January 2025) represents a 3.9% increase year-over-year. The consensus EPS estimate of $0.64 for the same quarter indicates a 6.7% improvement year-over-year. The company has an impressive surprise history; it surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.

The stock has gained 74% over the past year and 53.6% over the past nine months to close the last trading session at $91.80.

WMT’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

It also has an A grade for Stability and a B for Momentum and Sentiment. Within the same A-rated industry, it is ranked #14 out of 36 stocks. Click here to see WMT’s ratings for Growth, Value, and Quality.

Stock #1: The Kroger Co. (KR)

KR is a food and drug retailer that owns and operates in supermarkets, multi-department stores, marketplace stores, and price-impact warehouses. It offers grocery, health, and beauty care items, general merchandise (including apparel, home goods, and toys), pet centers, fresh seafood, and organic produce.

On October 8, KR announced that Boost by Kroger Plus will include Disney streaming options as part of its annual memberships. The company’s members can choose from Disney+ Basic (With Ads), Hulu (With Ads), or an ESPN+ subscription as part of an inclusion benefit. This collaboration will make the program more valuable and convenient.

In the same month, KR closed the transaction to sell its specialty pharmacy business to Elevance Health. The specialty pharmacy, earlier owned by KR, serves patients with chronic illnesses that require complex care.

In terms of the trailing-12-month ROCE, KR’s 22.77% is 114.2% higher than the 10.63% industry average. Similarly, its 2.64x trailing-12-month asset turnover ratio is 204.8% higher than the industry average of 0.87x.

For the nine-month period, which ended on November 9, KR’s sales were $112.82 billion. The company’s operating profit rose 54.4% from the prior year’s value to $2.94 billion. KR’s attributable net earnings came in at $2.03 billion and $2.77 per share, reflecting an increase of 42.1% year-over-year.

Per the updated financial guidance for 2024, KR forecasts identical sales without fuel between 1.2% and 1.5%. The company expects adjusted FIFO operating profit to be in the range of $4.60 billion to $4.70 billion. Also, its adjusted net earnings per share is forecasted to lie between $4.35 and $4.45.

Analysts expect KR’s revenue and EPS for the current year (ending January 2025) to be $147.85 billion and $4.44, respectively. For the fiscal year 2026, its revenue and EPS are expected to grow marginally and by 6.8% from the prior year to $149.22 billion and $4.74, respectively.

Shares of KR have surged 28.1% over the past year and 13.4% over the past six months to close the last trading session at $58.90.

KR’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.

It has a B grade for Value, Sentiment, and Quality. Out of 36 stocks in the Grocery/Big Box Retailers industry, KR is ranked #9. Click here to see KR’s rating for Growth, Momentum, and Stability.

What To Do Next?

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WMT shares were trading at $91.80 per share on Thursday afternoon, up $0.99 (+1.09%). Year-to-date, WMT has gained 1.60%, versus a 0.58% rise in the benchmark S&P 500 index during the same period.