- The US consumer is in great financial condition. Credit card delinquencies are at all-time lows. Stimulus and unemployment benefits in addition to lower spending has consumers in strong financial position. Consumer spending should be extremely strong going forward.
- With ultra-low mortgage rates, home prices have soared and housing inventories are extremely tight. In addition, people are spending more time at home. This is the perfect environment for Home Depot. As home prices rise, people feel good about investing in their homes. Home Depot Pro customers see extremely high demand and growing backlogs. Pros have seen 4 straight quarters of accelerating growth.
- Walmart has done a tremendous job improving its digital presence. E-commerce is now 12% of their sales and grew 43% globally in the previous quarter. Customers spend $1300 per year online in addition to their in-store buying. Walmart + has roughly 9 million subscribers and offers discounts on prescriptions and gas as well as free shipping from online purchases and grocery delivery.
- On the negative side, both companies face extremely tough comparisons going forward as well as tight labor and wage inflation.
Is coronavirus or the Federal Reserve interest rate policy affecting your investment portfolio? How are you making adjustments?
By Chris Wang