The stock market's sharp sell-off is testing investors' patience. The recent tariff implementations and pauses have created a lot of near-term uncertainty.
That's particularly true for global retailers like Walmart (NYSE: WMT) and Target (NYSE: TGT) that sell goods and source materials in different countries. However, with overall stocks down, you can use this as a buying opportunity -- if the long-term fundamentals remain sound.
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Which one of these two retail giants offers better investment potential for those planning to buy and hold for the long haul?
Image source: Getty Images.
Walmart
Walmart operates namesake stores in the U.S. and internationally. It also runs Sam's Club, a membership club with warehouses in the U.S. and Puerto Rico. The Walmart U.S. business accounted for 69% of last year's $676.3 billion in sales.
The business was founded on keeping costs and prices ultra-low, and that remains true. Management continues to invest heavily in technology that combines its physical stores with e-commerce to offer convenience and fast delivery.
For instance, almost all U.S. Walmart stores have same-day pickup and delivery. Management also launched Walmart+, a subscription service that offers free shipping, discounts on gas, and a more efficient checkout process, a few years ago.
The low prices and convenience continue to draw customers. The Walmart U.S. segment saw same-store sales (comps) increase 4.6% in its fiscal 2025 fourth quarter. Higher traffic contributed 2.8 percentage points. with increased spending accounting for the balance. This period ended on Jan. 31.
The company remains highly profitable, putting it in a good position to increase investments to stay ahead of the competition. Fourth-quarter operating income, adjusted for certain non-operating expenses and excluding foreign currency fluctuations, grew 9.4% to $7.9 billion.
Walmart's share price hasn't been immune from the recent stock market sell-off. The stock has dropped 0.8% in 2025 (through April 9) versus 7.2% for the S&P 500 index, although that index fell more during the recent market downturn.
That valuation has remained constant since the start of the year. The stock has a price-to-earnings (P/E) ratio of 37.
Target
Target sells a wide array of goods, including apparel, beauty, home furnishings, food/beverage, and household essentials. It aims to differentiate itself by offering merchandise under its own brands and those sold exclusively at its stores and website.
The company's sales have been hurt lately as consumers have focused on basic items in the wake of rising costs. Still, Target's fiscal fourth-quarter comps increased 1.5%, driven by higher traffic that contributed 2.1 percentage points. The amount customers spent dropped 0.6 percentage points. The period ended on Feb. 1
Target's gross margin contracted 0.4 percentage points to 26.2%. That's due in part to higher promotional activity and markdowns.
Although management has given a cautious outlook for the year, including flat comps, the higher traffic shows people still like to shop at Target. They're just spending less right now and are drawn to discounts. That's likely due to larger economic forces that will subside at some point.
Target's stock price has taken it on the chin. The share price has fallen nearly 28% this year. That's partly due to tariff implementations and the feared economic effect on Target's costs and prices that will impact short-term profitability.
The shares have become cheaper, however. The stock trades at a P/E of 11, down from 14 at the start of 2025.
Which retailer to choose?
I like both retailers. Walmart's ultra-low prices will always attract customers. It's particularly true during challenging economic times. That's why its share price has held up relatively well.
Target depends on differentiated merchandise, and its customers will likely trade down to lower-priced merchandise when tough times come. But over the long run, people will likely return to Target.
Based on Target's attractive valuation and favorable long-term outlook, I'd choose its stock over Walmart right now.
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Lawrence Rothman, CFA has positions in Target. The Motley Fool has positions in and recommends Target and Walmart. The Motley Fool has a disclosure policy.
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