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It's a big noisy universe of stocks out there. Welcome to goodbye or goodbye. Our goal is to help cut through that noise to navigate the best moves for your portfolio. Today, we're looking at retail as consumer discretionary takes a hit during this initial pullback of 2025. I'm back now with Handy and Wash Asset Management President and CIO Kevin Mon rejoining us now. So let's get to the stock you like here.

Yes.

And it's one to be fair a lot of people like it's Walmart. The stock's up about 40% over the past year. It hasn't been immune to the pullback that we've seen. The company of course recently coming out with a tepid forecast for this year, but you still like it, looking back at the strength in part that we have seen thus far.

Yes.

Yeah, I mean, they beat on earnings, they beat on revenues and that's been a familiar story for Walmart over the past few years. Plus their e-commerce sales grew by 20%. So not only is their brick and mortar sales doing well, their online footprint is expanding. That's going to be important in the months ahead.

Um the company as we mentioned did come out with that weaker profit outlook. They talked about the effect of tariffs, they like many of their peers are talking about consumer spending potentially weakening.

Correct.

Yes.

Do you think they're going to be okay?

I do. If any of the retailers, they're most well-positioned to do well during an economic slowdown because of the diversification of the products they sell. On the staple side, they sell groceries, they sell toiletries, they sell household items. On the discretionary side, they actually sell electronics, technology and some of the richer apparel items. So I think they're well positioned to handle slowdown and come up well coming.

So you think they're balanced, maybe they'll get a trade down on the more discretionary side and then

And then that'll be offset by the staple side.

What about on the margins though? If they are seeing higher cost themselves?

Yeah, I think those profit margin pressures are going to be short-lived and if in fact we do get the slowdown that the Atlanta Fed is forecasting for Q1, you're going to see more consumers going into Walmart to make these staple purchases.

And then there's another reason that you like Walmart and that's the dividend it pays.

Yeah. I always like dividends, especially when returns are challenged as we've seen thus far in 2025. Dividends are an important part of that total return equation, not a tremendous dividend but a good consistent dividend of around 1%.

We always like to talk about what's a reason to be a little more cautious and that is in this case the valuation. And I was looking at the chart of the valuation and it really has broken out significantly above 30, which is not something that we are accustomed to when it comes to Walmart 30 times earning.

Yes.

Yeah.

Yeah, I'm not the only analyst or portfolio manager that likes Walmart. They're trading at about 36 times current earnings right now. That is a little bit rich. They could also suffer a little bit more if the consumer rains in spending, recognizing that 70% of our economic growth does come from the consumer. So two areas of concern, but I still believe they're positioned well here.

And as you told us earlier, you're long-term guys. So trying to look past some of maybe the short-term weakness. Let's talk about the stock you don't like as much. That is Coles. And as lovely as the Walmart chart is, that's how ugly the Coles chart is.

A long-term guy, absolutely.

Yeah, the stock is down. I think 66% over the past year, the latest leg down coming with the company's latest numbers. Fourth quarter earnings and revenue down here.

In terms of full disclosure, I was in Coles yesterday. I did buy a new wallet and some socks, but

Oh, you don't mean the stock. You were literally in a Coles yesterday.

No, in the store itself. I didn't buy the stock. I certainly didn't buy the stock, but I did support the actual business itself. I mean, their earnings their revenue fell sharply in Q4, the outlook for the balance of 2025 isn't that rosy either.

Gotcha. And so let's talk a little bit more about that and also the longer-term kind of declines that we've been seeing from the company because it's not just this quarter.

Yeah.

Yeah.

I mean, this is over the last decade, Jules. We've seen a decline in sales operating margin. That's why they brought in Ashley Buchanan to try and turn around this whole ship. Time will tell if she could do it, but right now, I'm going to sit on the sidelines and wait.

And this is also the inverse of Walmart in another way and that's when it comes to dividends. The company just cut its dividend.

Yes, never a good sign.

Cut their dividend from about 50 cents a share to 12 and a half cents per share. Perhaps the right thing to do in addition to the layoffs that they announced, but it's concerning to me as an investor.

Right, and doesn't give you a reason, that little bit of a cushion while you ride out some of the slowdown.

No, correct. All three of these things aren't positives.

What could go right here? Maybe they get back maybe the turnaround plan works and they get back to it.

Yeah, they do pay a dividend. Let's say Ashley Buchanan is successful, turns things around, shores up the balance sheet, they start growing revenues and they become profitable again. Right now, they're only trading at about nine time current earnings, so their valuation is very attractive, but the story behind the valuation actually isn't very attractive.

They need to sell a lot more wallets.

A lot more wallets, a lot more socks and I'm doing my part.

You are, we need more Kevin Mons I guess in the coles. Thank you so much Kevin. Really appreciate this.

Absolutely.

And thank you so much for watching. Goodbye or goodbye. We'll bring you new episodes at 3:30 p.m. Eastern.