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E-commerce sales growth and higher margins from online ads can propel Walmart stock to new highs.
Walmart's 10,000+ locations let the company offer same-day deliveries, which helps it stand out from the competition.
The holiday season is a great time for retail stocks, but not all of them carry that rally into the new year. And then some retailers continue to post excellent sales numbers regardless of the time of year. Walmart (NASDAQ: WMT) is in that category.
It's the everything store for a lot of people. Walmart's global e-commerce sales continue to grow, and online ads are boosting its profit margins.
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Image source: Getty Images.
Walmart stores aren't just stores. They are also distribution facilities that help the company fulfill same-day deliveries for online orders. Walmart has more than 10,000 stores, which makes it easier to distribute goods to more people.
The number of stores and its wide range of products helped Walmart deliver 27% year-over-year global e-commerce sales growth in Q3 FY26. Walmart's growing e-commerce business helps it compete with Amazon (NASDAQ: AMZN).
One of the weaknesses of retail stores is that they have low profit margins. Walmart offers low prices to attract customers and make it harder for competitors, but the company's net profit margin usually hovers at 3%.
Walmart is on the cusp of a $1 trillion valuation, and digital ads online and in stores may be the next catalyst. Ads have a higher margin than retail sales, which can help Walmart boost profits in the future.
The global retailer's ad segment increased by 53% year-over-year in Q3 FY26. It's still a small part of the business, but that growth rate suggests Walmart ads can make up a larger slice of the pie soon. Online ads can propel Walmart's profit margins and make the stock more attractive.
Walmart stock should do well this holiday season, but the company can continue to perform well in 2026 and beyond.
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Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Walmart. The Motley Fool has a disclosure policy.
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