With shares of Wal-Mart Stores Inc. (NYSE:WMT) trading at around $68.52, is WMT an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
C = Catalyst for the Stock’s Movement
When it comes to retail, investors are now concerned about higher payroll taxes. In the case of Wal-Mart, everything evens out in the end. On the negative side, higher payroll taxes will cost the average consumer between $18 and $20 per week, which means low-income earners will be more selective and budget-conscious with their purchases. On the positive side, this could lead to middle-income earners looking for better bargains than wherever they currently shop, and Wal-Mart fits the bill. Therefore, if the stock price gets hit because of higher payroll taxes, it may present a buying opportunity.
In other news, Wal-Mart is getting involved in the health insurance business. More specifically, Wal-Mart would like to offer low-cost health insurance to small businesses. If this is played correctly, Wal-Mart could do very well in this area. Wal-Mart has some experience in the industry, having partnered with Humana (NYSE:HUM) to offer Medicare Part D prescription drug plans. Wal-Mart also has real estate listings in its Memphis store. This is a company that will continuously look for growth avenues, and it will step on anything and anyone in its way. This is exactly why so many people hate Wal-Mart, as well as why so many investors love it.