Confident in Wal-Mart - Contrary to Market Pessimism

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Wal-Mart Stores Inc.'s (WMT) sales advanced in June. Consumers used tax rebates to buy discounted items. Sales at stores open at least a year climbed 5.8 per cent compared to June last year. Profit for the quarter will rise to between 82 and 84 cents U.S. per share.

Better than expected June sales, according to some analysts, were caused by the stimulus checks, and the effect is going to be temporary. Discounters are benefiting the most in a situation where the consumer is hit by soaring prices of food and energy. Sales will return to be sluggish when all checks have been mailed. Stocks of retailers other than discounters have printed a very bad performance lately.

The market, however, is continuously shaken by bad news. Oil, housing and the credit crunch are simultaneously hitting the economy. Even positive news, like this one about WMT sales, is interpreted negatively. Investors do not have the confidence to put money in this market and prices continue to slide. It is difficult to find elements in the news that anticipate an improvement of the general situation, and pessimism is everywhere.

I think that in this phase, there are good opportunities and good sale prices in the stock market, and not only at WMT and other discounters. WMT is one of the few stocks still in an uptrend in this horrible summer for the stock market. On Thursday, shares lost 0.8% at $57.21. Presently , prices are moving sideways within the $55.60 and $59.30.

Disclosure: none

Comments

[madmilker]

The Chinese yuan has gone up 20% and the US dollar ain't worth but $0.12 which makes all tat China items cost more for the American consumer.
quote*In China, as elsewhere, we follow the Wal-Mart tradition of building our business one store and one customer at a time. We strive to provide our customers with friendly service and a wide selection of quality products at Every Day Low Prices. With each Wal-Mart store we bring advanced retail know-how to the local market. By fostering a healthy, competitive environment, we hope to constantly improve our business operations and customer service in order to contribute to the prosperity of the local economy.

Wal-Mart firmly believes in local procurement. We recognize that by purchasing quality products, we can generate more job opportunities, support local manufacturing and boost economic development. Over 95% of the merchandise in our stores in China is sourced locally. We have established partnerships with nearly 20,000 suppliers in China. At Wal-Mart, we always work with our suppliers to grow together. In August 2007, Wal-Mart once again secured the top spot of the 2007 Supplier Satisfaction Survey conducted by Business Information of Shanghai. Additionally, Wal-Mart directly exports about US$9 billion from China every year. The export volume by third party suppliers is also estimated to be over US$9 billion.*end quote!

Now! if there be 182 country's making items for the world to buy and they have only 5% of the pie in China...duh! This company makes the nice people of China support their currency(yuan) by keeping it in their country working for the people there.... but with the "yuan" going up in value and the US dollar going down...all the foreign items that the American consumer buys thinking it is cheap has went up in price. People...its all about the currency and to keep a currency strong you got to keep it floating around the country you live in so it can work for you. For the past 12 years all them US dollars are being shipped overseas to a foreign bank and with the American worker not making anything for the foreigner to buy the "we the people" have to turn to the "second" largest employer in America(Uncle Sam) to sell "we the people" debt in order to get all them dollars back! 50 years ago a foreigner would had given their left nut for a US dollar or a Hershey's chocolate bar and today the same foreigner has got Uncle Sam and the American consumer by both all the while Hershey is moving the chocolate factory to Mexico. Wakeup! America and think "MADE IN AMERICA" and put the word Washington back in D. C.....Washington had been reelected unanimously in 1792. His decision not to seek a third term established a tradition that is now embedded in the 22d Amendment of the Constitution. Read his Farewell Address of Sept. 17, 1796 and think American made for a change.
Maybe you need to red...oops! read what the Governor of Tennessee did to your word "Confident." Very smart person!

[jerico]

Good article. Walmart's is in the right place at the right time for the current economic conditions. Of course, they have been in the same place for almost 50 years. Recently, stores have been improved, employee benefits and practices have improved, and they are still setting the benchmark for logistics excellence.

They are opening new Supercenters in Michigan, Illinois, and the industrial north that were previously hostile territory. Even California is slowing opening up to Walmart. Union Supermarket tuff has fought Walmart with everything but armed resistance. Industrial jobs can be exported when unions destroy a company's competitiveness, retail and service unions are the only ones that can potentially survive. It is hard to export grocery store jobs to China, no matter how high you drive up the cost of food to the public.

In the part of the country where unions control the labor and hence the cost of operating food stores, the prices were quite high. The average citizen has responded positively to big drops in food prices when Walmart comes to town.

Walmart has continued growth opportunities in North America. Meanwhile, the international operations are booming with double-digit growth.

Yeah, I think they will be around for a while and make more money every year for the next 50 years.