For a number of years now, retail giant Walmart (NYSE: WMT) has been stuck in no-growth territory. Over the last five years, Wal-Mart's top line has expanded a mere 4.37% while net income has increased just 6.88%. In comparison, the S&P 500 has seen revenue grow 83.58% while net income has increased 96.28% over the period. Consequently, WMT stock has badly lagged the  retail sector and the S&P 500, with a gain of 37.5% vs. 56.7% of the retail sector and 58.3% of the S&P 500.

Wal-Mart vs. SPDR S&P Retail ETF 5-Year Returns

Source: CNN Money

But this year the tables have turned with WMT outshining both the retail sector and market with year-to-date gains of 19.3% vs. -3.5% for the retail sector and 2.31% for the S&P 500.

Wal-Mart vs. SPDR S&P Retail ETF YTD Returns

Source: CNN Money

So why has investor sentiment about Wal-Mart changed so suddenly? It's quite easy, really. Over the past couple of years, the consensus has been that Wal-Mart was just too big to grow. That line of reasoning certainly seems tenable because the law of large size tends to kick in with a vengeance when companies grow much faster than their sector, as Wal-Mart did during the 90s and during the early part of the 2000 decade. With a revenue haul of $482B last year, Wal-Mart has a bigger revenue base than Apple (NSDQ: AAPL), Microsoft (NSDQ: MSFT), and Amazon (NSDQ: AMZN) combined.

But Wal-Mart is now slowly but surely beginning to show signs of coming back to life. During the last quarter, the company posted revenue of $115.9B, good for a modest but positive 0.9% Y/Y growth. Meanwhile, comparable store growth clocked in at 1%, marking the seventh straight quarter of positive same-store growth.

Meanwhile, Wal-Mart's decision to downsize its giant store count in the U.S. and reward its store workers with a pay hike has paid off by improving worker efficiency and inventory management. But more importantly, more people are now flocking to Wal-Mart stores. The number of weekly shoppers visiting Wal-Mart stores recently hit 260M after growing 1.4% Y/Y.

Closing the gap with Amazon

Wal-Mart says that it aims to add $60B in sales over the next five years mainly by focusing on international expansion and ecommerce growth. Whereas Amazon remains the undisputed leader in online retail, Wal-Mart has been making significant progress in this arena. Although Amazon's 180M online shoppers are more than double Wal-Mart's 84M, Wal-Mart online traffic has been growing at 14% Y/Y, almost double Amazon's 7.8% growth clip.

Further, Wal-Mart has been enjoying robust success in the third-party marketplace. The company had only six third-party merchants back in 2014 but now boasts 300. Wal-Mart's third-party marketplace grew 65% during the final quarter of 2015 according to ChannelAdvisor. One big incentive for third-party merchants to sell their merchandise on Walmart.com is the ability to take part in promotions such as Value of the Day.

Meanwhile, Wal-Mart has copied many of Amazon's online selling strategies as I explained in this article. Wal-Mart has even adopted Amazon's pricing strategies and dumped its everyday low prices model last year in favor of Amazon's fluctuating prices. Wal-Mart is stepping up the battle with Amazon and  introduced a free 30-day trial for Shipping Pass, the same-day delivery service that offers Amazon-like perks just a few days ago.

The outlook for WMT stock

They say large ships take ages to turn and this certainly rings true in the case of Wal-Mart. Although the company is making good progress in online commerce, online sales still make up just 3% of its overall sales. It will, therefore, take years before they can have a significant impact on the company's top and bottom lines.

Wal-Mart's ambitious international expansion and downsizing its local store count can, however, have a more immediate and tangible impact on both the top and bottom lines, and help the company realize its goal to grow sales by $60B over the next five years. As long as the company keeps marching towards that goal, WMT stock can make sizable gains over the next couple of years.