The stock market has recovered its losses from the coronavirus pandemic, led by FAANG stocks like Amazon that barely missed a beat during the crisis. But with these companies trading at such high valuations, investors seeking more value-oriented stocks might feel left out. But anyone seeking gains at a lower price can start by checking out Walmart (NYSE:WMT).

Walmart is a popular stock on Robinhood, an investment app that's caught on with millennials because of its low fees and user-friendly platform. The company publishes a list of its 100 most widely held stocks, which can be a good resource for investors looking for their next big idea. Walmart is my top choice from this group because of its modest valuation, competitive advantage, and compelling long-term growth drivers. The company is poised to outcompete e-commerce rivals because its extensive logistics network gives it an advantage in last-mile delivery.

Let's dig in.

Dollars in a bag

Image source: Getty Images.

Why Walmart?

Value stocks are companies that trade at low multiples compared to their earnings and growth potential. Walmart fits comfortably into this category. With a market cap of $385 billion on Monday morning, the massive retailer trades at just 71% of revenue ($542 billion) and has a price-to-earnings (P/E) multiple of 22, compared to the S&P 500's average of 30. 

For comparison, high-flying e-commerce rival Amazon boasts a P/E of 134. 

Walmart's low multiples can be partially explained by the slow growth of the mature supermarket industry, which only expanded at a compound annual growth rate (CAGR) of 1.2% from 2015 to 2020. But that valuation doesn't seem to appreciate Walmart's convincing push into the significantly faster-growing market for online retail, which will power the company's next leg of growth. 

Transitioning into higher-growth business model 

Walmart reported earnings for its fiscal second quarter on Aug. 18, and the results demonstrate the blue-chip retailer's transition into higher-growth lines of business. Total revenue spiked 5.6% to $137.7 billion, due to a 9.5% increase in comparable sales in the U.S. and spectacular growth in the e-commerce business, which soared 97% at Walmart and 39% at Sam's Club. 

The company is poised for continued e-commerce expansion because of its massive physical infrastructure and the roll-out of Walmart Plus, an exciting new platform that could take market share from Amazon Prime. 

Walmart has a significant advantage over Amazon in last-mile delivery, a term that refers to the movement of products from a transport hub to their final destination. Walmart's network of 6,100 pickup and delivery locations in the U.S. allows it to offer next-day delivery to over 75% of the entire American population -- and the company is also expanding its same-day delivery option, which allows customers to receive products within three hours of placing an order. 

Walmart's upcoming subscription service, Walmart Plus, is expected to leverage these advantages into a $98-per-year package that will undercut Amazon Prime's $119 price tag by $21. 

You haven't missed the boat

The market is not ignoring Walmart's impressive pivot to e-commerce. The stock has already jumped 15% year to date compared to a 9% gain in the S&P 500, and the company looks poised for continued long-term growth because of its low valuation and compelling long-term growth drivers. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.