There have been lots of factors in the so-called “death of the mall” beyond Amazon (AMZN) and a spent consumer. Overbuilding is one example. From 1970 to 2015, American malls grew twice as fast as the U.S. population. That comparison only increases when you look at population growth overseas:

  • 43% above Canada
  • 411% above the UK
  • 879% above Germany

In July, retail sales came in significantly better than expected, powered by people going to malls and restaurants. These aren’t anomalies, as we’ve seen this happening over the past four months.

The tailwinds powering the return of the American consumer were spelled out by White House economic advisor Larry Kudlow, who pointed out some of those trends, including current Gross Domestic Product (GPD) trends:

  • 1st Half 2018: 3.1%
  • 2Q 2018: 4.1%
  • 3Q 2018: 4.3% (Atlanta Fed prediction)

Consumer Charge

I think the market is set up for balanced portfolios to score big with momentum names, as breakouts are sending stocks parabolic. However, there are a lot of great yet boring names with fantastic risk-versus-reward levels here. Walmart (WMT) is one of them, as it benefits from the strong economic and muscular American consumer, and we saw that in its latest earnings report.

The company’s results on August 16 exhibited pricing power and market share gains. The stock popped almost 11% at the open and carried the entire market along for the ride.

Earnings came in at $1.29 per share on a 3.8% increase in revenue to $128 billion from a year ago. Looking forward, management expects fiscal year earnings of $4.90-$5.05 per share, topping their previous guidance of $4.75-$5 per share.

Some other highlights include:

  • Traffic: +90 basis points (bps)
  • Ticket: +180 bps

Comparable Store Sales:

  • S. Walmart: +4.7%
  • S. Sam’s: +7.7%
  • S. Total: +5.2%

This report was a grand slam and speaks to a revitalized American economy and the appeal the stock carries. As the economy continues to grow, I look for WMT to do the same.