With shares of Wal-Mart (NYSE:WMT) trading at around $68.75, 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
We’ll start with the most important fact, which is that any dip in Wal-Mart’s stock price has proven to be a buying opportunity.
A lot of people negative on the company will point to a saturated market, but there is still a lot more room for growth. This is especially true on an international level. While China and Japan are going through some rough patches, Wal-Mart has its eyes set on Africa, Mexico and more. Domestically, Wal-Mart aims to take market share away from its competitors as it has done so many times in the past. The next mark is dollar stores. Wal-Mart has the advantage, but dollar stores are going to be tough to defeat. Most of them are located in suburbs or small towns, and they have very loyal customers. Dollar General (NYSE:DG) isn’t backing down from a fight. By the end of 2012, they will have opened 625 new stores.
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Wal-Mart has been hammering many local supermarkets. Because of lower prices alone, some people will drive several miles out of the way for discounts. If gas prices continue to head lower, we could see this trend grow bigger in the near future.
As you probably already know, India would like to launch an inquiry into Wal-Mart lobbying. This is after Wal-Mart apparently paid $25 to U.S. lawmakers for access to foreign markets. Thinking this is news that will have any impact on the long-term performance of the stock would be like dropping a quarter into a fountain and making a wish. In other words, keep dreaming. This isn’t a Disney movie. It means absolutely nothing. If the stock is affected in the short term, then it can be looked at as a buying opportunity. Now let’s take a look at some important numbers for Wal-Mart.