How To Build A Wal-Mart Portfolio

by: Friedrich Research

For those of you who love to shop at Wal-Mart (NYSE:WMT) but don't want to put all your eggs in one basket by just investing in Wal-Mart stock alone, I have prepared a list of 13 companies that get more than 20% of each company's total sales just from selling to Wal-Mart. So by building a portfolio of these holdings you can still benefit from the success of Wal-Mart and still be well diversified. If you are thinking of creating such a portfolio, you must always remember that owning some of these firms could end up being a double edge sword. By this I mean that these companies will surely benefit greatly by having a customer like Wal-Mart make up such a large portion of total sales, but at the same time an investor can get crushed if Wal-Mart decides to stop using any one on this list. So before investing in such a portfolio always be aware of this concern and stay alert.

Before I list the 13 companies, here is a chart of Wal-Mart so you can compare its performance with the suppliers in this article.

Here is the list of the 13 companies along with a description of each business and a chart showing how each did over the last nine months:

1. Schiff Nutrition International Inc. (SHF)

Schiff Nutrition International, Inc. develops, manufactures, markets, and distributes vitamins, nutritional supplements, and nutrition bars in the United States and internationally.

Percentage of Schiff's Sales to Wal-Mart = 46.96% (source: Bloomberg estimate and Shiff's 2011 Annual Filing)

2) Cal-Maine Foods Inc. (NASDAQ:CALM)

Cal-Maine Foods, Inc. engages in producing, grading, packaging, marketing, and distributing shell eggs. It also produces and markets specialty shell eggs, including nutritionally enhanced, cage free, and organic eggs under the Egg-Lands Best, Farmhouse, and 4-Grain brand names; and private label specialty shell eggs.

Percentage of Cal-Maine Foods Sales to Wal-Mart = 32.6% (source: Cal-Maine Foods 2011 Annual Filing)

3) Cott Corporation (NYSE:COT)

Cott Corporation, together with its subsidiaries, engages in the production, packaging, and distribution of private-label beverages in North America and internationally. It offers carbonated soft drinks, flavored waters, energy-related drinks, juice, juice-based products, bottled water, and ready-to-drink teas.

Percentage of Cott Corporation's Sales to Wal-Mart = 31.6% (source: Cott Corporation's 2011 Annual Filing)

4) MoneyGram International inc. (NYSE:MGI)

MoneyGram International, Inc., through its subsidiaries, provides payment services worldwide. The company operates in two segments, Global Funds Transfer and Financial Paper Products. The company provides money transfer and bill payment services to unbanked or under banked consumers. Its bill payment services allow consumers to make urgent payments or pay routine bills through its network to various billers in the credit card, mortgage, auto finance, telecommunications, corrections, satellite, property management, prepaid card, and collections industries.

Percentage of MoneyGram International's Sales to Wal-Mart = 29% (source: MoneyGram's 2011 Annual Filing)

5) J.M. Smucker Co. (NYSE:SJM)

The J. M. Smucker Company engages in manufacturing and marketing branded food products primarily in the United States, Canada, and internationally. The company's product portfolio includes coffee, peanut butter, fruit spreads, shortening and oils, baking mixes and ready-to-spread frosting's, canned milk, flour and baking ingredients, juices and beverages, frozen sandwiches, toppings, syrups, and pickles and condiments.

Percentage of J.M. Smucker's Sales to Wal-Mart = 26% (source: J.M. Smucker's 2011 Annual Filing)

6) Clorox Inc. (NYSE:CLX)

The Clorox Company manufactures and markets consumer and institutional products worldwide. The company operates in four segments: Cleaning, Lifestyle, Household, and International. Here are some of its brand name products: Clorox, Formula 409, Liquid-Plumr, Pine-Sol, S.O.S, Tilex, Javex, Glad, PinoLuz, Ayudin, Limpido, Clorinda, Poett, Mistolin, Lestoil, Bon Bril, Nevex, Brita, Green Works, Pine-Sol, Chux, Kingsford, Fresh Step, Scoop Away, Ever Clean, K C Masterpiece, and Hidden Valley.

Percentage of Clorox's Sales to Wal-Mart = 26% (source: Clorox's 2011 Annual Filing)

7) Hanesbrands Inc. (NYSE:HBI)

Hanesbrands Inc., a consumer goods company, engages in designing, manufacturing, sourcing, and selling a range of basic apparels in the United States and internationally. It offers T-shirts, bras, panties, men’s and kids’ underwear, casualwear, activewear, shapewear, socks, and hosiery products primarily under the Hanes, Champion, Bali, Playtex, Just My Size, L’eggs, barely there, Wonderbra, Gear for Sports, Stedman, Zorba, Rinbros, Sol y Oro, Outer Banks, and Duofold brands.

Percentage of Hanesbrands Sales to Wal-Mart = 25% (source: Hanesbrands 2011 Annual Filing)

8) Jakks Pacific Inc (NASDAQ:JAKK)

JAKKS Pacific, Inc. designs, produces, and sells toys and consumer products in the United States and internationally. It provides traditional toys and electronics products comprising action figures and accessories primarily based on Ultimate Fighting Champion, Total Non-Stop Action wrestling, and Pokémon franchises; Road Champs, Fly Wheels, and MXS toy vehicles and accessories; and electronics products under the SpyNet, EyeClops Bionic Eye, Laser Challenge, and Plug It In & Play TV Games based on Disney and other brands.

Percentage of Jakks Sales to Wal-Mart = 24.63% (source: Jakks 2011 Annual Filing)

9) Tootsie Roll Industries Inc. (NYSE:TR)

Tootsie Roll Industries, Inc. engages in the manufacture and sale of confectionery products primarily in the United States and Mexico. It primarily offers candy products.

Percentage of Tootsie Roll's Sales to Wal-Mart = 23.3% (source: Tootsie Roll's 2011 Annual Filing)

10) Church & Dwight (NYSE:CHD)

Church & Dwight Co., Inc., together with its subsidiaries, develops, manufactures, and markets a range of household, personal care, and specialty products under various brand names in the United States and internationally.

Percentage of Church & Dwight's Sales to Wal-Mart = 23.3% (source: Church and Dwight's 2011 Annual Filing)

11) Leapfrog Enterprises Inc. (NYSE:LF)

LeapFrog Enterprises, Inc. designs, develops, and markets technology-based learning products and related proprietary content for children worldwide. The company offers multimedia learning platform products, including LeapPad, a kid-tough personalized learning tablet with a built-in camera and video recorder;

Percentage of Leapfrog's Sales to Wal-Mart = 23% (source: Leapfrog's 2011 Annual Filing)

12) General Mills, Inc. (NYSE:GIS) manufactures and markets branded consumer foods worldwide. The company also supplies branded and unbranded food products to the food service and commercial baking industries. It offers ready-to-eat cereals, refrigerated yogurt, ready-to-serve soups, dry dinners, shelf stable and frozen vegetables, refrigerated and frozen dough products, dessert and baking mixes, frozen pizza and pizza snacks, grains, and fruit and savory snacks; a range of organic products, including soups, granola bars, and cereals; and ice cream and frozen desserts, and grain snacks.

Percentage of General Mill's Sales to Wal-Mart = 22.52% (source: General Mills 2011 Annual Filing)

13) Perrigo Co.(NASDAQ:PRGO)

Perrigo Company, through its subsidiaries, develops, manufactures, and distributes over-the-counter (OTC) and generic prescription (Rx) pharmaceuticals, infant formulas, nutritional products, and active pharmaceutical ingredients (NYSEMKT:API) worldwide.

Percentage of Perrigo's Sales to Wal-Mart = 22% (source: Perrigo's 2011 Annual Filing)

There are many more firms that supply to Wal-Mart that I have excluded from this article, but if there is interest on behalf of Seeking Alpha's readers I will prepare a part #2 article on the rest at some point down the road.

Disclosure: I am long WMT, CLX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.