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Inflation’s fattening Walmart’s wallet | Vodafone heard alarm bells ringing |

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Today's big stories

  1. Walmart’s warming sales set it up for a very jolly festive period
  2. Here's where you might want to invest now China's readying to reopen – Read Now
  3. Vodafone’s results showed that the telecom operator has some tricky times ahead

Closing The Sale

Closing The Sale

What’s Going On Here?

No discounts here: data out on Tuesday showed Walmart’s still bringing in sales despite its swelling prices.

What Does This Mean?

Looks like Walmart’s been applying its “save money, live better” slogan to its own bottom line: the world’s biggest retailer has been passing inflation-charged costs onto its loyal shoppers, which helped beef up sales from stores open for at least a year by over 8% last quarter from the same time last year. And the fact that the firm’s inventory only grew by 13% – a far cry from the previous quarter’s 25% (tweet this) – will only add to the pre-festive cheer: investors won’t want to see piles of excess stock being sold with heavy discounts during the all-important holiday season, after all. Shareholders’ smiles likely got even wider after Walmart announced a new $20-billion share buyback plan too, rounding out a very good day in the Bentonville office.

Why Should I Care?

Zooming out: Everyone budgets.
Inflation’s so rampant that even higher-income shoppers are pulling their purse strings that little bit tighter and checking out more budget-friendly stores. In fact, Walmart estimates that around 75% of last quarter’s market share gains came from households with incomes over $100,000. And with fired-up prices sticking around for now, cheap-and-cheerful stores could be in the money for a while longer.

The bigger picture: Being sticky is good.
Thing is, Walmart’s not the only firm with the power to pass rising costs onto its shoppers without putting them off. Quite the opposite, in fact: companies in all sorts of industries are upping their prices, confident that their customers won’t check out their equally-pitched competitors. The question for investors, though, is whether firms can keep their prices steady and sticky if and when cost pressures ease – a more achievable task for businesses with fewer direct competitors and a loyal fanbase.

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Analyst Take

With Less To Drag On China's Economy, Here's Where To Look For Opportunities

With Less To Drag On China's Economy, Here's Where To Look For Opportunities

By Russell Burns, Analyst

For the past year, China’s economy has been burdened by twin crises – one brought by stringent Covid restrictions and the other by its hugely inflated and debt-laden property sector.

But the government’s new measures on both fronts may soon lift some of the burden, and get the world’s second-biggest economy moving again.

That could be good news for your portfolio.

So that’s today’s Insight: where you could find opportunities now that China’s outlook’s getting brighter.

Read or listen to the Insight here

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Hold The Phone

Hold The Phone

What’s Going On Here?

Alarm bells are ringing for Vodafone shareholders: the telecom company released results on Tuesday that confirmed a list of problems as long as a phone book.

What Does This Mean?

You’d think telecom stocks would be a safe bet in today's trying times, what with their generally stable revenues and juicy dividends. But a quick look at Vodafone’s shares – currently languishing at 25-year lows – blows that theory apart. See, the British cellphone operator’s fighting battles on a few fronts, including dizzying energy costs, higher interest repayments on its debt, and fierce competition. But the real war’s being fought in Germany, Vodafone’s biggest market, where it’s under pressure to shell out big bucks to upgrade its network and stop a slow bleed of customer losses. No surprise, then, that the firm’s shares tumbled when it cut its cash flow outlook for this financial year by around 5%, leaving it lying around the $6 billion mark.

Why Should I Care?

For markets: Something’s gotta give.
Vodafone’s chunky 7% dividend yield – that’s its annual dividend payment as a percentage of its stock price – is one of the top ten in the UK, which might make it look like an out-and-out steal. But dividend-hunters beware: payouts can only be made from the cash that’s left over when day-to-day costs and one-off expenses have been taken care of. And right now, the cost of everything from energy bills to wages is only going up.

The bigger picture: Till debt do us part.
Let’s be real: most of us would turn down our heating before giving up our phones. That’s one reason why revenues tend to be so stable for telecom companies, and that dependable income means they can usually borrow on the cheap to fund things like dividend payments and network upgrades. Now, debt’s hunky dory when interest rates are low, but when rates drift higher like they’re doing now, the resulting higher interest payments can weigh on a firm’s profit – and its stock price.

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💬 Quote of the day

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– Patrick Kavanagh (an Irish poet)
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🌍 Finimize Live

🥳 Coming Up Soon…

All events in UK time.

How To Successfully Invest In Dividend Stocks: 6pm, November 22nd
🚄 How To Bulletproof Your Portfolio From Uncertainty: 6pm, November 23rd
🔥 The Coolest Investments When Inflation’s Hot: 12.30pm, November 28th
🇬🇧 Making Smart Portfolio Moves During A Cost-Of-Living Crisis: 5pm, November 29th
🌍 Finding Opportunities In A Challenging Market With BlackRock: 1pm, December 2nd
🇦🇪 The Modern Investor Opening Party In Dubai: 6pm, December 6th
🎉 Modern Investor Summit: 12pm, December 6th and 7th

🎯 On Our Radar

  1. Daniel Radcliffe’s weird. Here’s why the former wizard’s playing a musical oddball.
  2. Time to cough up. Maybe we should just pay Musk the $8.
  3. Creature comforts. You can upgrade your living space on the cheap.
  4. Talk about counting sheep. Apparently animals can actually understand numbers.
  5. A different kind of conversion. Business leaders can learn a lot from this religious order.
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