Walmart Inc (WMT) Dominates Amazon.com (AMZN) in Household Spending

Wayne Duggan

Home spending is on the rise, according to the latest survey data from Bank of America. A maturing millennial generation is one of the primary drivers of the surge in spending, and analysts say Walmart Inc (NYSE: WMT) will be a big winner.

Bank of America analyst Robert Ohmes has combined the results of a new RIWI survey with Bank of America's internal card data and found that older millennials (age 31 to 38) spend roughly twice as much on building materials and furniture as younger millennials (age 22 to 30).

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An uptick in household spending will provide a boost to all retailers in the home improvement, appliance, furniture and household goods markets. However, when it comes to household goods, Walmart is the market leader. When asked where they purchase the majority of their household items, Walmart was by far the most popular response among survey respondents of all age groups. Even among millennials age 22 to 30, 36 percent of respondents prefer Walmart for household shopping compared to 19 percent for Amazon.com ( AMZN) and 14 percent for Target Corp. ( TGT).

For older millennials, Walmart's lead is even larger with 37 percent market share compared to 17 percent for Amazon and 14 percent for Target.

"Our survey indicated WMT is the preferred retailer for household items across all age demographics [over Amazon]," Ohmes says.

Walmart is Bank of America's top stock pick to play what it calls the "discount store decade," a 10-year period in which aging baby boomers and millennials will drive a shift toward more budget-conscious spending.

"We believe a demographic shift to 'budget conscious' families should benefit Walmart, Target, Costco ( COST), Dollar General ( DG), Dollar Tree ( DLTR) and Sprouts Farmers Market ( SFM)," Ohmes says.

But while other discount retailers like Dollar General and Dollar Tree could also stand to benefit from more discount spending, Raymond James analyst Dan Wewer says Walmart is undercutting other discount retailers in an effort to gain market share. Raymond James' latest round of price checks revealed that Walmart products are currently priced at their largest discount to competitors' products of any time in the past 18 months.

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"Our latest survey provides evidence that Walmart is reinvesting some of its tax savings into pricing as part of an effort to grow market share," Wewer said on Monday.

Bank of America has a "buy" rating and $120 price target for WMT stock.

Wayne Duggan is a freelance investment strategy reporter with a focus on energy and emerging market stocks. He has a degree in brain and cognitive sciences from the Massachusetts Institute of Technology and specializes in the psychological challenges of investing. He is a senior financial market reporter for Benzinga and has contributed financial market analysis to Motley Fool, Seeking Alpha and InvestorPlace. He is also the author of the book "Beating Wall Street With Common Sense," which focuses on the practical strategies he has used to outperform the stock market. You can follow him on Twitter @DugganSense, check out his latest content at tradingcommonsense.com or email him at wpd@tradingcommonsense.com.