Did you know Walmart and Amazon have the same P/E ratio?

BY ANDREW GIOVINAZZI

September 11, 2024

Yo Pit Crazies,

You want to learn how to put pair trades together to catch up and down markets? Look no further thanWeekly Profits Cycles.

Speaking of Two Way Trades, I saw this today and thought I could not believe my eyes. Amazon.com (Ticker: AMZN) and Walmart Inc (Ticker: WMT) trade at the same P/E multiple of 41. 41x earnings, what a huge number! What is funny is that is the number AMZN has traded for the last 20 years. The earnings just keep growing but the stock price peaked after they split the stock and has not made a new high since.

WMT on the other hand has gone gangbusters since 2020. The stock is up nearly 100% in that time and split in early 2024.

WMT 5 year chart

WMT and AMZN are different kinds of stocks that need two different types of trades.

Let’s see what they are.

A pair trade is generally a long and a short side of related securities

At this point where is AMZN going with a $1.8 Trillion market cap and WMT trading a $600 billion market cap. Revenues are about the same with both companies as AMZN expands its store base and WMT expands its online presence.

Below is the AMZN Dec20 150 put and during the Aug 05 swoon they traded for $14 and now are trading $2.50. Such is the power of volatility in a big move.

If the CPI number becomes something, and the very jittery market sends us screaming below 5300 this week, selling some puts in AMZN might not be a bad idea. I would take that put premium I collected and buy some calls in WMT.

Over time I think WMT will come up to AMZN and not the other way around. I don’t think AMZN will spend a lot of time below $150 either. There is always room for another 1 trillion dollar global enterprise, especially one with global reach.

To Your Trading Success,