Source: PaxForex Premium Analytics Portal, Fundamental Insight

Retail giant Walmart has held the top spot in revenue among publicly traded companies for about 20 years (it displaced ExxonMobil from that throne in 2001). Thanks to its discount sales business model and steady growth in the number of stores across the U.S. and around the world (about 10,500 worldwide), the company generated about $560 billion in annual revenue in the fiscal year 2021.

E-commerce giant Amazon has broken through the ranks of publicly traded companies and took the unofficial No. 2 spot last year (technically No. 2 is China Petroleum & Chemical, but its controlling stake is owned by the Chinese government). But even though Amazon's $386 billion in sales lags far behind Walmart's total sales, Amazon is growing much faster and could eclipse Walmart much sooner than it may seem.

Let's take a look at exactly how.

Before becoming the largest U.S. company by revenue, Walmart was the largest U.S. retailer. The Arkansas-based company operates worldwide under 48 brands, including several e-commerce sites.

The pandemic ended up being a big boost for Walmart, with sales up nearly 7 percent over the past year, much higher than the company's more typical low single-digit growth numbers.

However, because the pandemic caused such an unusual year, sales are expected to decline slightly or return to low single-digit growth on an adjusted basis in the current fiscal year. In all likelihood, revenue this fiscal year will be about $560 billion.

The company still sees room for growth over the long term, despite its unparalleled growth. CEO Doug McMillon said: " There are so many more opportunities ahead. ... It's a very different business today, and we're just getting started."

Walmart has been in launch mode lately, especially focusing on its Walmart+ e-commerce initiative, a new customer subscription program designed to challenge Amazon Prime. However, in the first quarter of the fiscal year 2022 ( ended April 30), Walmart's digital sales grew only 37%, not quite matching Amazon's sales growth in the same period.

Amazon currently dominates digital sales and is growing much faster overall. The fiscal year 2020 sales are up 38%, and they are also inflated compared to the normal year as a consequence of the pandemic. But even in a normal year, Amazon's growth has been meteoric: 20% in 2019 and 31% in 2018.

The company predicts that sales will grow 24-30% in the second quarter of fiscal 2021 (Amazon is usually ahead of forecasts). This year, the company is moving Prime Day from its usual July event to June and into the second quarter. It may help the company beat challenging quarterly numbers, but growth may slow down from the pandemic highs.

While management has not provided any guidance for all of 2021, we can simulate several scenarios for low-end and high-end based on first-quarter sales growth, second-quarter forecasts, and typical third and fourth quarter growth statistics. We can also give some general numbers for the future and see when Amazon might overtake Walmart as the largest U.S. company in terms of revenue.

Amazon's revenue totals in 2021 will still be somewhat affected by the pandemic nature of shopping, which will boost the overall figure even if it slows down in the second half of the year.

The safe forecast assumes growth of 25 percent and the optimistic forecast assumes growth of 30 percent. Based on these projections, year-over-year revenue growth would look like this: growth rates of 25% and 30%, Amazon's projected 2021 sales of $482.5 billion and $501.8 billion, respectively.
If you take those two revenue numbers and project them for 2022 at three different growth percentages, here's what you get:

By comparison, if Walmart's latest revenue figure stays flat over the next year and grows 3% in the fiscal year 2023 (which represents the calendar year 2022 sales), the company will generate about $577 billion. It means that even with the lowest estimates, Amazon will be the largest U.S. company in terms of revenue by the end of 2022. If growth is lower, it may take a little longer but it will happen soon enough.

The results presented in this little review don't necessarily mean that you should sell all the Walmart stock you own, or even that you should necessarily buy Amazon stock. Being #1 in revenue is more for showing off than anything else.

Rather, this conclusion is a clear indicator of the extent to which Amazon has become a dominant retail force. As Amazon's dominance continues to grow, it will have business implications for both companies, and since we are talking about such large companies, for the economy as a whole. Whether these consequences are good or bad is not for us to decide.

In this case, investors considering buying Amazon stock should pay attention to the high growth rate that the company continues to show even at such a huge size, and perhaps examine the data further, as it suggests that these stocks would be a good addition to an investment portfolio.

While the price is above 3240.00, follow the recommendations below:

• Time frame: D1
• Recommendation: long position
• Entry point: 3346.83
• Take Profit 1:  3508.00
• Take Profit 2: 3579.00

Alternative scenario:

If the level 3240.00 is broken-down, follow the recommendations below:

• Time frame: D1
• Recommendation: short position
• Entry point: 3240.00
• Take Profit 1: 3123.00
• Take Profit 2: 3053.00