Jim Cramer Backs Walmart After 18% Slump: 'Buy It', Amid Falling Fuel Prices

Walmart shares have shed almost a fifth of their value since May, and CNBC's Jim Cramer is telling investors to treat that slump as an opening rather than a warning.

The stock closed at $111.54 (£84) on Tuesday, down roughly 18 per cent from the record high of $135.16 (£101) it reached on 19 May. It has fallen for four straight weeks and is roughly flat for the year. Much of that damage, though, had little to do with Walmart itself.

The retailer was swept up in what Cramer called a 'vicious' rotation, as money drained out of high-flying artificial intelligence names into unloved corners of the market. His advice was blunt: buy the stocks that had fallen hardest.

Walmart sat near the top of that list. 'I think you're getting an incredible buying opportunity here, because the stock's been getting pummeled right as Walmart's biggest worries have started to fade away,' the host said on Mad Money. He added that the stock was 'worth buying into weakness here, especially if you missed out on the fantastic rally over the past couple of years.'

The sell-off traces back to Walmart's first-quarter results in late May. Revenue beat forecasts, US comparable sales rose 4.1 per cent, and e-commerce jumped 26 per cent. Yet management held full-year guidance steady rather than lifting it, and the outlook sat below Wall Street's expectations. A roughly $175M (£131M) fuel hit to distribution costs deepened the unease.

Why Cramer Calls the Walmart Sell-Off a Buying Opportunity

Cramer's case is that investors punished the guidance and skated past the quarter beneath it. 'This really wasn't a bad quarter by any stretch of the imagination,' he said.

The loudest worry had been fuel: pricier petrol threatened Walmart's margins and the budgets of the shoppers it leans on. That pressure has eased fast. After a spike tied to the conflict with Iran, the national average for a gallon of petrol slid from a May high of $4.56 (£3.42) to $3.79 (£2.84) by early July as oil prices retreated. Mizuho analyst David Bellinger has since cut his estimate of Walmart's annual fuel burden from about $925M (£693M) to between $700M and $800M (£525M to £600M).

A softer consumer, Cramer argued, works in Walmart's favour. When money is tight, shoppers hunt for value. He called the company 'a trade down play' with 'a lot of incredible value,' adding that 'while consumers are struggling a bit, Walmart's going to be an ideal destination for shoppers.' The retailer pressed that point on Tuesday, cutting prices across food, beverages, outdoor living, toys, and apparel.

Tariff Refunds Could Bankroll Walmart's Next Price Cuts

The second pillar of the bull case is cash the company has not yet booked. After the Supreme Court struck down the Trump administration's emergency tariffs in February, US importers were left owed about $166B (£124B) in refunds, with Walmart among the biggest claimants.

Chief financial officer John David Rainey has said any refund sits outside current guidance, capping the potential windfall at less than half of one per cent of annual US sales, or about $2.4B (£1.8B), though Citi has put the total claim as high as $10.2B (£7.6B). 'We think the single best return that we can have on a dollar of capital right now is to invest in the customer and invest in price,' he told analysts. Chief executive John Furner said Walmart already had about 7,200 rollbacks running, more than a fifth higher than a year earlier.

Cramer framed the refunds as a two-way win: either they fall to the bottom line as an 'upside surprise because it's not in the numbers,' or Walmart funnels them into deeper discounts to squeeze rivals.

None of this makes the shares cheap. Walmart still trades near 40 times trailing earnings, a clear premium that leaves little room for error if spending falters.

Even so, Mizuho has kept its Outperform rating and a $137 (£103) target, while Bank of America's Christopher Nardone said the latest price cuts fit inside existing guidance without denting margins. For Cramer, the recent damage has already more than paid for the risk.

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