Nov 18 (Reuters) - Walmart ( WMT ) shares are set for

their best yearly gains in over two decades as the retail

behemoth's low prices for everyday essentials give it an edge

over competitors facing weak demand from budget-conscious

consumers.

The stock has gained about 60% so far this year,

outstripping gains of about 13% in the S&P 500 Consumer Staples

sector index, as well as a 21% rise in the S&P 500

Consumer Discretionary index.

Rival Target's ( TGT ) shares are up about 7% this year,

while the benchmark S&P 500 has risen 23%.

The stock jumped 106% in 1998 when the company was expanding

its supercenter store format, and solidifying its position in

Canada and Mexico.

The record jump was sandwiched between a roughly 70% rise in

Walmart's ( WMT ) stock price in 1997 and 1999.

"Organic growth along with a strong balance sheet and low

levels of debt make Walmart ( WMT ) a very popular stock right now,"

said Brian Mulberry, client portfolio manager at Zacks

Investment Management.

Walmart ( WMT ) is set to report its third-quarter results on

Tuesday, Nov. 19, and is expected to post a roughly 4% rise in

revenue and 5% growth in adjusted operating income, according to

estimates compiled by LSEG.

The retail bellwether has started to benefit from

investments in its ecommerce and advertising businesses that

have helped the company grow its operating income at a faster

clip than its revenue.

The company has invested billions over the last few years on

automation in its supply chain to help stock fresher produce at

its stores and improve delivery times as consumers increasingly

prefer the convenience of purchasing groceries online.

"Walmart ( WMT ) is just increasing its addressable market. Their

execution has been great, especially against Amazon ( AMZN ), which does

not have its logistics networks built out in rural parts of

America like Walmart ( WMT ) does," said David Wagner, head of equities

and portfolio manager at Aptus Capital Advisors.

Walmart ( WMT ) has also focused on high-margin revenue streams such

as its marketplace and retail media units to support steady

demand for lower-priced essentials at it supercenters.

Growth in Walmart's ( WMT ) advertising and membership segments

accounted for more than 50% of its operating income growth in

the second quarter, CFO John Rainey said on a post-earnings call

in August.

While Walmart's ( WMT ) advertising business, which was launched in

2019, is at a much more nascent stage than powerhouse Amazon ( AMZN ),

the grocer has been seeing strong growth in the unit over the

last few quarters, outpacing gains at Amazon's ( AMZN ) more diverse

platform.