Tom Armistead's  Instablog

Tom Armistead
Send Message
I am a retired accountant, having spent the early years of my career in the insurance industry and the later part in the field of accounting. My insurance experience has given me the willingness to accept investment risk if I feel the return justifies it; also, an interest in applying risk... More
My blog:
Tom Armistead's Instablog
  • Adding WalMart 2 comments
    Oct 31, 2013 11:12 AM | about stocks: WMT

    Today I added a position in WalMart (NYSE:WMT) to the synthetic Dividend Growth portfolio. A number of holdings, such as MicroChip (NASDAQ:MCHP), Lorillard (NYSE:LO), Texas Instruments (NYSE:TXN) and Raytheon (NYSE:RTN) have advanced to where the spreads are deep in the money and provide little market exposure.

    Going to Portfolio123 I ran the screener that advances candidates for consideration and started going through the prospects. WalMart is undervalued by my methods and trading well below its historical average P/E per FASTgraphs.

    Using S&P projections for the current and one future year, plus 3 years historical earnings, projected 5 year average EPS works out to $4.97. Applying a multiple of 20 for a high quality stable value stock, I get a target price of $99, compared to today's price in the $77 area. There is room for capital appreciation, and the dividend yield is 2.44%.

    Using a 15 year view, here is the chart from FASTgraphs:

    (click to enlarge)

    The stock has fallen out of favor recently, and is not commanding its previous multiples. At the current P/E of 14.9 the investor gets a dividend that is likely to increase and a stable value investment that may eventually trade at a higher multiple.

    It's a Dividend Champion per David Fish's list, with a 38 year streak.

    I think it makes a good long-term holding and is not over-valued even in today's heated market.

    Disclosure: I am long WMT.

    Stocks: WMT
Back To Tom Armistead's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (2)
Track new comments
  • Tom Shaughnessy
    , contributor
    Comments (1145) | Send Message
     
    Tom nice write up! I wrote about WMT vs AMZN the other day, I think you may like it!

     

    http://seekingalpha.co...

     

    Best,
    Tom
    31 Oct 2013, 03:05 PM Reply Like
  • Tom Armistead
    , contributor
    Comments (6228) | Send Message
     
    Author’s reply » Thanks, I checked it out, good analysis. I personally use Amazon from time to time simply because they sell almost everything and it can be done over the internet. But as an investment I say "Where's the Beef?" meaning profits.

     

    WalMart I don't like their attitude towrd employees, thousands of part-timers with no medical coverage, the emphasis on cheap cheap cheap, the fact that those who do business with them have trouble making money, etc.

     

    But as an investment their business model works very effectively, and I'm not going to let the fact I don't like their style get in the way of running my investments properly.
    31 Oct 2013, 03:31 PM Reply Like
Full index of posts »
Latest Followers

StockTalks

  • $CRC filed 8-K, they amended their covenants. Being thrown out of S&P 400 mid-cap index, OXY unloading its remaining shares, I added today
    Feb 24, 2016
  • $CRR just noticed a form SC 13G, Wilks Bros, Dan and Staci Wilks own about 10%. Texas billionaires. Compare that to the huge short interest.
    Jan 16, 2016
  • $CRC reveals they have received a 24 month modification of their term loan and revolver. This reduces potential financial stress.
    Mar 24, 2015
More »

Latest Comments


Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.