'Selling the Basics' Ahead of Coronavirus Shutdowns

Coronavirus crushed the market in March... But as we've said before, not all businesses are suffering.

In fact, some are even thriving. Businesses like medical-diagnostics company Quest Diagnostics (DGX), consumer-products giant Procter & Gamble (PG), and IT-services company Booz Allen Hamilton (BAH).

Today, we're continuing to look at companies benefiting from the COVID-19 pandemic...

As of last Saturday, 26 states had issued shelter-in-place orders. And sections of 13 more had done the same. That means that folks are being told not to leave their homes unless absolutely necessary – to do things like go to the grocery store or to the doctor.

As coronavirus spreads, more of these shelter-in-place orders are likely... And that has consumers rushing out to stock up on basic goods. That should be a huge benefit for today's company...

Walmart (NYSE: WMT) is the largest brick-and-mortar retailer in the world. Every week, 265 million people visit its stores.

In the U.S., 95% of consumers shopped at one of Walmart's stores or on its website in 2016, according to the NPD Group's Checkout Tracking service. That's higher than the percentage of folks who ate at McDonald's (MCD). And 90% of Americans live within 10 miles of a Walmart.

Walmart is as close to a "recession proof stock" as you will find. It focuses on cheap prices. And it has more than 11,500 stores in 27 countries. Because of its size and scale, it's tough for any competitors to undercut it on prices. People will visit its stores to buy cheaper goods in both good times and bad.

This is evident in Walmart's sales growth.

The company has grown sales in 19 of the past 20 years – a period that includes two recessions. Over the past 12 months, the company brought in $524 billion in sales.

And Walmart is seeing opportunities because of the COVID-19 pandemic...

While Walmart hasn't given an update to a rise in demand, one of its chief competitors has given us a clue. In its recent earnings release, Target (TGT) said it has been experiencing "unusually strong traffic and sales" in the past couple of weeks. Target called the surge in demand "unprecedented."

This is likely a trend that will continue for big-box retailers like Target and Walmart as COVID-19 cases continue to rise in the U.S.

And people aren't just going to stores... With these shelter-in-place orders, they're turning to e-commerce. They're ordering a lot of stuff they need directly to their homes to avoid the risk of catching or spreading the virus. And that includes things like groceries, too.

Walmart is also expanding to take advantage of this with a growing online and grocery focus. And this business line has been thriving.

Grocery delivery was available at more than 1,600 stores at the end of 2019. Walmart offers one-time grocery deliveries for a fixed fee, as well as unlimited deliveries through an annual subscription. And its main focus, online grocery pickup, was available at 3,200 stores at the end of last year.

That means Walmart's online grocery platform is now accessible to roughly 80% of the population. It's going be a major force in online groceries.

By selling essential goods at low prices, people will always turn to Walmart stores. And that's exactly what the company is seeing right now as consumers rush out to stock up on goods ahead of shelter-in-place orders.

In fact, one Walmart employee told the New York Times that the recent rush of demand is comparable to Black Friday.

As a result, the company has started a massive hiring push. It pledged to hire more than 150,000 workers to make sure shelves remain stocked and enough checkout lanes remain open during this time of higher demand. That means it's boosting its workforce by 10%.

During the recent market sell-off, Walmart's shares held up fairly well. While the S&P 500 Index was in the middle of the sharpest decline in recent memory, WMT shares were actually reaching new all-time highs.

Overall, the company's shares are only down 7% since February 19, the date the S&P 500 reached its all-time high. The index, on the other hand, is down 25%.

U.S. consumers continue to stock up on goods, preparing for shutdowns. Walmart's low prices, wide reach, and grocery-delivery service make it one of the leaders in selling basic needs. And its recent price action has shown that not only does its business outperform in all environments... WMT shares do, too.

Sometimes investing is simple.