Why Wal-Mart Stores Stock Jumped 11.7% in October

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What happened

Shares of Wal-Mart Stores (NYSE: WMT) popped nearly 12% last month, according to data from S&P Global Market Intelligence. The retail behemoth announced a massive new share-repurchase program and offered an optimistic outlook for the year ahead.

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So what

During its annual investor day, Wal-Mart reiterated its profit forecast for fiscal 2018, including adjusted earnings per share of $4.30 to $4.40. The midpoint of that range would be up slightly from fiscal 2017's $4.32 in adjusted EPS.

Looking further ahead, Wal-Mart expects EPS growth of 5% in fiscal 2019, driven by a 3% rise in sales and new cost control measures.

Investors also cheered Wal-Mart's plans to repurchase $20 billion of its shares -- or about 7% of its current market cap -- over the next two years.

Now what

Wal-Mart's tremendous free cash flow generation allows it to return huge sums of capital to shareholders through dividends and stock buybacks, even as it continues to invest in new growth initiatives such as its booming e-commerce operations. That's an enviable position to be in, one that should allow Wal-Mart to weather the retail apocalypse better than perhaps any other traditional retailer. As such, investors seeking a defensive, income-generating retail stock may wish to consider Wal-Mart Stores.

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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.