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Tomorrow I will add shares of Walmart (WMT) to my Jubak Picks Portfolio. The stock is one of the 12 “Recession Picks” in my current Special Report: A Recession is Coming–Three Portfolio Strategies for a Recession; and 12 Recession Stock Picks on my subscription site..

Right now I think Walmart’s stock has three things going for it. And only one of those is explicitly linked to a recession, which makes it a great recession stock (since, hey, we think with good reason that a Recession is coming but economic cycles are never certain and they are hard to time so any Recession might be coming in 2024 instead of the second half of 2022 or in 2023. The more distant dates on that schedule would make for a very long, uncomfortable period of playing defense.If that’s all that a stock pick is doing for ya.)

First, the recession-specific edge to these shares. Walmart has crated a brand that is heavily identified with low prices and saving. Consumers looking to sock away an extra buck or three in anticipation of tougher times ahead will automatically turn to Walmart first. The company has succeeded in turning itself into the #1 grocery store in the United States, which guarantees a lot of traffic from consumers looking for daily or weekly savings. (Groceries accounted for 56% of Walmart sales in 2021.)

Second, Walmart has built out the infrastructure and supply chain to deliver those cost savings to consumers. The company can leverage its tremendous retail clout to get the best deals from suppliers and then pass those savings (or some of them anyway) along to customers as lower prices. That creates a kind of virtuous cycle where low prices drive traffic and traffic drives volumes, which then drive low prices.

Third, Walmart’s strategy of selling in all channels is clicking. The company has physical stores within 10 miles of 90% of the U.S. population. That means physically shopping and picking up goods is extremely convenient. (And even before the Pandemic, when most brick and mortar retailers were getting killed by e-commerce rivals, the company consistently posted low-single-digit traffic/transactions growth.) At the same time, Walmart’s e-commerce strategies are delivering fast growth and high volumes. Walmart+, the company’s new membership program offering unlimited rapid delivery, fuel discounts, and mobile scan and go in exchange for a $98 yearly fee looks to be a real competitor to Amazon’s Prime. Walmart’s e-commerce efforts were still only 12% of fiscal 2021 sales, but revenue from this channel grew by 65% during the Pandemic and looks to be continuing high growth rates even as the Pandemic retreats. Walmart posted nearly $50 billion in U.S. e-commerce sales in fiscal 2021, which ranks the unit as among the largest 20 domestic retailers by sales across all channels. Morningstar projects that the company’s online unit will lead 2.5% comparable store sales growth for Walmart’s U.S. division and that sales in the e-commerce business will growth at a low-double-digit annual digital growth long-term.

I’m adding the stock to the Jubak Picks Portfolio with an initial target price $175 of a share. The stock closed at $151.09 on April 4. The shares pay a dividend of 1.46%. They were up 4.75% for 2022 to date as of April 1.