A Headline Lawsuit Reveals a Buying Opportunity in this Top Wealth-Creating Company

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  • Shares of Walmart (WMT) have been trending down for a few weeks. To add insult to injury, the U.S. department of justice sued the company right before the holidays. Why? Because the firm’s pharmacies may have been underfunded, which in turn may have helped fuel the opioid crisis.

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  • While that headline sounds dire, it’s anything but. Walmart sued the DOJ earlier in the year, seeking clarification on the role of pharmacies, their employees, and their role under the law.

    In short, while this lawsuit sounds dangerous, it’s really just some legal jockeying. In any event, the news was enough to push shares slightly lower, to their lowest price in over a month. With the full holiday retail numbers aren’t out yet, chances are Walmart continued to increase its profitability and sales, including ecommerce. Add in the new Walmart+ membership in a swipe at Amazon, and shares look attractive.

    Action to take: Investors might want to consider adding a position in shares here. The stock is trading under its 50-day moving average, and the recent decline has pushed the dividend yield up to 1.5 percent.

    For options traders, a rebound play like the March 2021 $145 calls look attractive. They’re the at-the-money play on shares. Last trading for about $6.00, they offer mid-to-high double-digit returns, likely as soon as holiday sales numbers start coming in.

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