We recently compiled a list of 8 stocks with the lowest short interest to buy. In this article, we’ll take a look at how Walmart Inc. (NYSE:WMT) stands compared to other stocks with the lowest short interest.
A report by S3 Partners revealed that traders who had bet on US-listed stocks suffered up to $6.9 billion in mark-to-market losses due to the rise in Chinese stocks as a result of the stimulus package. The benchmark CSI 300 index has risen by more than 22% over the past month. The Nasdaq Golden Dragon Index rose by more than 34% during the same period. Much of these increases are due to policy easing measures.
S3 Partners went on to say that prior to this market rally, short sellers continued to build positions to profit from declining markets. However, after the rally, short selling within the group slowed down. Before China announced its stimulus package, shorting Chinese stocks was a popular strategy, with multiple market participants underweight the sector.
Short sales in Q2 2024
S3 Partners reported that short interest in the US/Canada market increased by $57.9 billion (5.1%) to $1.2 trillion in Q2 2024. This increase consisted of $73.9 billion in new short interest, partially offset by a $16.0 billion decrease in short interest in the market. Market value of the stock sold short. The sectors with the highest increase in short interest during the quarter were the IT, industrials and communications services sectors. Meanwhile, only the energy sector saw a decrease in the number of stocks sold short (short covered).
Short sellers reduce positions in this sector
S&P Global reported that short sellers decided to withdraw bets on consumer staples stocks on U.S. exchanges over the summer. This comes amid an overall increase in short interest across stocks. According to recent data, short interest in the consumer staples sector fell from 4.16% at the end of May to 3.87% at the end of August. The drop in short interest on consumer staples stocks may be due to lower inflation.
Meanwhile, short interest in the industrial sector increased by 21 basis points from the end of May to the end of August, in the healthcare sector by 20 basis points and in the real estate sector by 19 basis points. company. With expectations for further interest rate cuts, market experts say demand in the consumer staples sector is likely to persist. As a result of consumer spending, gross domestic product (GDP) growth in the second quarter of 2024 was a solid 3% (annualized rate), roughly double the growth rate in the first quarter, according to the Bank of the United States.
story continues
After September’s interest rate cut, market strategists recommended going long the consumer discretionary and consumer staples sectors. That’s because these sectors are expected to receive a boost as lower mortgage rates could benefit spending, Reuters said.
Therefore, consumer confidence may recover to some extent as inflation and interest rates are expected to fall. This could lead to increased spending on daily necessities, leading to improved performance in the daily necessities sector. Consumer staples and consumer discretionary had the best average performance among S&P 500 sectors, with both rising up to 14% in the year after the rate cut, according to Evercore.
our methodology
To list the 8 stocks with the lowest short interest to buy, we used the Finviz screener to extract a list of stocks with the lowest short interest. Next, we narrowed it down to the following eight stocks with short interest of less than 2%. Finally, stocks were ranked in order of short interest.
Why are we interested in stocks that hedge funds invest in? The reason is simple. Our research shows that by mimicking the top stock picks of the best hedge funds, you can outperform the market. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, outperforming the benchmark by 150 percentage points (Learn more ).
Manager standing in a large supermarket and pointing to products available for wholesale.
Walmart Inc. (NYSE:WMT)
% Short of Float (as of September 30th): 0.72%
Number of hedge fund holders: 95 people
Walmart Inc. (NYSE:WMT) is engaged in retail, wholesale, other segments, and e-commerce operations throughout the world.
Walmart Inc. (NYSE:WMT) continues to invest in omnichannel capabilities that will help strengthen its e-commerce platform while leveraging its vast store network for services such as curbside pickup and home delivery. I am making use of it. The company is also expanding its private brand products, including introducing “Better Goods” at Walmart US and strengthening the “Member’s Mark” brand at Sam’s Club. Such initiatives are expected to improve brand loyalty and increase sales.
Walmart Inc. (NYSE:WMT) continues to reduce costs and improve operational efficiency through supply chain automation and significant investments in in-store technology. The company is also focusing on high-margin businesses such as Walmart Marketplace, Walmart Connect (advertising), and financial services to increase profitability.
Walmart’s (NYSE:WMT) price leadership, enhanced assortment, and focus on convenience through digital and delivery services should continue to be key tailwinds. The company’s multifaceted approach has helped it attract and retain high-income customers. This has broadened its appeal across demographic segments.
Wells Fargo & Company analysts increased their target price on shares of Walmart (NYSE:WMT) from $81.00 to $88.00 and gave the company an “overweight” rating on September 23rd. Market experts believe that the company’s international arm, primarily its investments in Flipkart, offers significant growth opportunities.
Overall, WMT ranks 2nd on our list of stocks with the lowest short interest to buy. While we recognize WMT’s potential as an investment, some highly undervalued AI stocks have a strong potential to deliver higher returns and do so in a shorter time frame. I’m sure there is. If you’re looking for highly undervalued AI stocks that are more promising than WMT but still trade at less than 5x earnings, check out our report on the cheapest AI stocks.
Read next: A $30 trillion opportunity: Morgan Stanley and Jim Cramer say NVIDIA has ‘become a wasteland’, 15 humanoid robot stocks to buy
Disclosure: None. This article was originally published on Insider Monkey.
