Wal-Mart in a league of its own

The leading retailer remains a top defensive stock for a weak economy.

By TheStockAdvisors Jul 3, 2012 1:18PM
By Gordon Pape, Internet Wealth Builder

Wal-Mart (WMT), which is celebrating its 50th year in business, hardly needs an introduction. This retailer has it all. It has dominated the discount market for many years and will continue to do so for the foreseeable future.

In keeping with my advice to buy stocks in companies that can continue to generate profits in a weak economy, I am adding the shares to our Recommended List.

Recently, CEO Mike Duke said, "Wal-Mart is the best-positioned global retailer in the world today." It may sound boastful, but he's right. No one else is in the same league.

Why do people flock there? Because it's cheap, of course. Wal-Mart consistently manages to undersell everyone else.

The company employs more than two million "associates" world-wide and claims to serve more than 200 million customers a week.

And while Wal-Mart may represent the values of middle America, it has become an international retailer with 10,130 stores under 69 different banners in 27 countries.

In mid-May, the company reported results for its 2013 fiscal first quarter (to April 30). Earnings from continuing operations came in at $1.09 per share. That was up from $0.96 the year before and ahead of the company guidance of between $1.01 and $1.06 per share.

U.S. comparable stores sales increased by 2.6% while sales at its Sam's Club stores were up 5.3%, not including fuel. Those are healthy increases for a well-established company in a weak economy.

Consolidated net sales were $112.3 billion, an increase of 8.6% from last year. Wal-Mart ended the first quarter with free cash flow of $3.1 billion and had cash in the bank of $8.1 billion.

Return on investment (ROI) for the trailing 12-month period was an impressive 18.1%. From a financial perspective, this is a very sound company.

The share price has moved higher in recent months, bucking the trend in the U.S. market. However, at about 14 times anticipated fiscal 2013 earnings, it does not appear to be out of line.

In March, the company announced a 9% dividend increase, bringing the annualized payout to $1.59 a share. Yielding 2.4%, Wal'Mart is a 'Buy' for defensive investors.

More from TheStockAdvisors:


Tags: WMT
23Comments
Jul 4, 2012 7:12AM
avatar

TO Charlie 1914, I have been an associate at Wal-Mart for 21 years, when a hurricane came thru VA and knocked our power out for over 21 days I lost all the food that my family had in the freezer about $300.00. With three young kids and missing work due to the storm, I knew we would not be able to replace the meat that we lost when I returned to work I was asked if I had lost anything with the storm and I told the person about the freezer the next day I had a check from the associate in critical needs fund, When disasters hit like Katrina Wal-Mart had truck loads of relief supplies there before the government could act. When 911 hit the rescue workers boots soles were melting. Wal-Mart showed up with trailer loads of boots and gloves to help. Yes I guess the best decision I ever made was accepting a job at Wal-mart in 1991. You get back what you put into something honest hard work is rewarded I'm proof I have a great job with good benefits, You always have people who are unhappy that try to get something for nothing and I think that’s where the negative comments come from... WORK ETHIC is something some people will never have

Jul 4, 2012 12:05AM
avatar

I personally think Sam Walton would be disgusted by how wal-mart is acting today.  I remember when he was alive, you could go into wal-mart, get American made products, pay a low price for them, and not even have to wait in line.  Now it's cheap chinese products, nasty produce, and waiting 20 minutes for a cashier.  I'm so thankful I live in an area where there's enough options that I don't have to shop there.

Jul 3, 2012 9:47PM
avatar
Too bad Wal Mart does all that "good" earnings and returns on the backs of the "associates".  When they start to take care of the people who make it possible then I will believe in their good works and maybe start to trade there again.
Jul 4, 2012 10:04AM
avatar
in a lot of towns if you dont shop at walmart you have to go out of town to shop, in the town i live in if there were a target here i would never step foot in a wal mart, and yes wal mart ini a league of its own its there only store that has more china crap then any other store, and every thing in wal mart is not cheap, in my store produce is  as high as albertsons and not as good, and i have bought some hardware at home depot cheaper. the reason wal mart is so big is cause they have stores every where and a lot of towns dont have a choice but to shop there
Jul 4, 2012 1:10AM
avatar
I am SO tired of all the negativity about Walmart. I have worked there for 8 years and they've been very good to me. Have any of you 'customers' ever thought that a large part of your problems could be the attitude you walk through the doors with? Oh no, of course not, what am I thinking. It's the rude Walmart Associates! You know, we are people just like you, we have families, bills to pay, you might work in a nice office, but this is where we work. You are no better than we are, but some of you treat us like servants, so it's no wonder somebody might get a little bit testy. You might look down on us, thinking we have a demeaning job because we work at Walmart, but chances are our benefits are a whole lot better than yours. Big example: I had neck surgery that cost over $22,000. After our Blue Cross insurance paid their part, I paid about $75.00. We've been told our benefits are the best of any company in operation. I take full advantage of the stock options, share plans, 401k, retirement, etc. As far as the bad produce and the other things mentioned, those things are local issues. Produce is purchased from local growers most of the time, so if you get bad items it means the grower is having a bad year, and sold the store bad merchandise. Are you smart enough to realize that you can save your receipt, and then if it's bad the store should take it back. I don't understand what charlie 1914 means by good works. Walmart continuously works for the Children's Miracle Network, having fundraisers and collecting donations, and that's the basic daily stuff. There are car washes, rummage sales, bake sales, other various promotions at different times. Obviously you people have decided to see Walmart in a certain light, or maybe it's the stores in your areas, but the stores here must put yours to shame.
Jul 4, 2012 12:44PM
avatar

Its too bad they dont treat their employees better than they do, sounds like they can afford it. I hope I never have to work at WalMart again. I have never been treated so bad at a work place. I try not to have to shop there either. I dont like giving them any of my money/!

 

Jul 4, 2012 12:33PM
avatar
My Husband's small business got Walmart as a client. Worst client we ever had. They strung out paying us for over 90 days, then started to reduce their bill, until it was over 120 days before we got paid at a lesser amount. We spoke to other small businesses and were tole that is they way they did business with them too.
Jul 4, 2012 9:46AM
avatar
There is no question about them raising prices and shrinking container size.  That can be documented many times over.   What is worse is when they put an inferior product in a premium marked container as I have discovered over and over when it comes to solid white albacore tuna packed in water.   More and more I get dark shredded tuna instead of what I paid for.   I switched to Star-Kist months ago and NEVER had the problem since.  I have heard similar complaints so this is not an isolated problem. 
Jul 3, 2012 10:42PM
avatar
This article tells you something about the Wal Mart customers.They don't care how many bad things Wal Mart does to give them such low prices, as long as they get them.There may come a day when Wal Mart is so big, that we will have practically nowhere else to shop.
Jul 4, 2012 11:12AM
avatar
Walmart isn't doing anythng else any other store is doing they just have better logistics in selling you what you want.  I go into Target and what do they sell MADE IN CHINA, I go into Macy's more upscale where is most of their items made at same as Walmart.  You name them Sears, Belks, Penney's, Dillards  Everyone has turned to selling items which are manufactured outside the USA and the few who remain USA MADE can't compete on pricing.  For instance I was in Walmart and seen a Stainless Steel BHG Pots and Pans Set  Well Made product High Quaility Stainless very thick sides unlike the cheap stuff sold for $150.  I went into Bed, Bath and Beyond and saw something exactly like what I saw at Walmart it cost $800.  I kid you not it was made by All Clad.  So what is a person going to buy the $800 or the $150 and it gives you the same product oh and by the way the Walmart set was made in Brazil.  Which I was surprised to see instead of China.  I drove back over to Walmart and purchased their set of pans.  granted the price of those pans went into clearance for $75 in 6months but even at the price I paid $129.00 I got a great bargain.  I try and By USA Made when I can. And I have seen Walmart sell USA Made Items, not many but I do see them. But the American People want great prices. I bet you a dollar that if you were to have a USA MADE item hanging on the shelf next to a Made in China or Taiwan item and the quality is the same for both item the customer is going to buy the cheaper priced one. It is the way our minds work. Everyone is out to save money. I even buy my clothes at Walmart. I go elsewhere as well when I see sales or good buys. But I seen a Nice shirt in Walmart for $8.00 the same shirt in Macy's was $55.00. WM was George Branded the other was Polo Both were made in Indonesia or Malaysia probably made in the same factory just split down the line one getting Polo branding the other George Branding. Same thickness in material same everything. I think for all of the hoopla you folks create is funny because Walmart gives their customers what they want. Quality Products at Affordable Prices.   If the Product is Crap the customer will not purchase it, we vote with our wallets.
Jul 4, 2012 8:03AM
avatar
is it walmart or the hard working employees that make the donations ?
Jul 4, 2012 12:45AM
avatar
Wal Mart's day of reckoning is overdue.  The author here states how successful Wal Mart has been and that they are a "buy" for defensive investors, but, Wal Mart has many profound ethical and PR issues and is alienating more and more consumers (and many of its employees).  There is now an organization called "OUR" (Organization United for Respect) that is made up of current Wal Mart employees who have totally valid grievances towards Wal Mart's longstanding mistreatment of its associates.  At sometime, this huge dam that Wal Mart has built will start giving way!
Jul 4, 2012 12:09PM
avatar
You people and MSN stink for supporting idiots like the Kardassians,Kanye West, Lewdy CaCa,Justa Beaver Madonna and Snooki.
Jul 4, 2012 12:50PM
avatar
Wal-Mart should be proud for putting Mom and Pop stores out of business for 50 years. Not to mention countless lawsuits ranging from screwing people out of O/T pay, numerous labor violations, suppression of women from upper management positions... too may to list. Then there's some of  the classy people that shop there who haven't taken their monthly shower.. With retail competition what it is today, their prices can be beat. Just shop around.
Jul 4, 2012 2:31PM
avatar

wake up and blend you idiots, you cant stop it.  its there and growing like a malignite cancerous boil, we as humans are no doctors nor do we have a solution, look around big boy, wal-mart is only a spit in the bucket, ever heard of greed and power ? it permeates the whole world, one business like wally-world is blending, look at them. UNHAPPY SUCCESS ?? had you rather die broke and hungry or rich and well fed? bitch all you want, i will see you at WAL-MART.

Jul 5, 2012 8:57AM
Jul 4, 2012 11:11AM
avatar

Walmart is usually cheaper in price, but not on everything. That would be virtually impossible! I can vouch and say that they sell cheap crap! Most of my major purchases from walmart have broken beyond repair. If you want a good reliable lawn mower, power washer or other major iems, I suggest that you pay the extra buck and void going to wally world. The meats are pre-packaged somewhere??? and distributed from several vendors. Have you ever wondered about the quality??? Wally world does not have their own butchers. They made that clear the day they debut the super center concept. The butchers that they did have threatened to form a union. Wal mart then fired them all and went to third parties for their meats. The other thing is, wal mart does not care about ANYONE! They will step on anyone in order to gain market share etc... In the end, they may employ the most people and serve the most, they are also no different than the Arab emirates of the world.

 

When was the last time you can honestly say that you received the best in customer service from any wal mart???

Jul 4, 2012 11:18AM
avatar
Keep workin for minimum wage while the cats at the top get fat.Wallmart is a fungas Typical Republican zen. WAKE UP AMERICA!
Jul 4, 2012 11:36AM
avatar
Of course its the greatest thing because its the black hole everything is consolidating into.  We'll all be in one big Wall-Mart Shopping Center.  The Wall-Mart Super Centers of America will be the new name of the US.
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

123
123 rated 1
273
273 rated 2
482
482 rated 3
661
661 rated 4
635
635 rated 5
639
639 rated 6
619
619 rated 7
489
489 rated 8
277
277 rated 9
166
166 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
AAPLAPPLE Inc10
ATVIACTIVISION BLIZZARD Inc10
BIDUBAIDU Inc10
CTSHCOGNIZANT TECHNOLOGY SOLUTIONS10
LUVSOUTHWEST AIRLINES CO.10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.