UValue

Amazon Taking the Fight to Wal-Mart

WMT was much cheaper at high 40's as investors rotated to high beta cyclical stocks...I bought it at $47. The company claims it took market share in this recession so we'll have to wait and see- as the largest retail company in the world it's hard for WMT to move the needle on top-line growth or to have a significant upside surprise but the company is improving its stores and shopping experience, has one of the best working capital management, and increasing its ROIC. If we believe that we had a consumption bubble in the past decade and going forward we will have a smarter-value oriented consumers, WMT is the place to be. After all we all learn in school that low cost is one of the classic competitive advantage a company can have....for a price leader such as WMT the stock should trade at 17x-18x but it lacked the catalyst to move it higher. I think now, investors rotating back into the stock- its up ~10% since Oct 30th. TP @ $63

Takeaways from McDonald's (MCD) Investor Day

Agree 100%..prob the best managed company in the QSR industry. They are basically mastering the franschise model and driving higher and higher ROIC through refranchising, operating improvement, remodeling and menu innovation. If you look 5y back on sss, the company is taking a significant market share from its competitors...however, its very hard to justify a target price above $75. Would also buy it at the low 50s but don't believe it's going to get there... don't forget the $1.5-$1.8 in dividends the company is paying.