There is a simple reason for the high WMT price 10 years ago and the stagnant 10 year ever since. It is called money flow from big institutional holders. They chased WMT to a high PE of 50 and then gradually dumped their shares. Same thing happened to Home Depot.
The stagnant PPS can not be explained by the execution. For over 10 years, WMT consistently increased its earnings per share - making it one of the most consistently-performed companies in Dow 30. The EPS grew from $1.4 in 2001 to just over $4 in 2010. This year, EPS is projected to grow another 10% to about $4.4.
What really happened is: when WMT's growth slows, Fidelity/Capital Group Companies etc continuously unload their shares - even at a loss. Today Fidelity may have less than 1/10 WMT shares than it had 10 years ago while Capital Group may have less than 1/20. They took out the money and chase new momo stocks like RIMM/AMZN/AAPL etc. While RIMM/AMZN/APPL are good companies, lots of their other momo plays simply did not work out, such as Nortel, AOL, MCI-Worldcom etc. That's why these big funds seriously lag behind the index in the long run. There is a consequence by ignoring the simple and plain investment.
The good news is that with the share repurchase through cash flow and borrowings, the big institutions simply do not have many shares to sell. In 2010, WMT bought back some 280 million shares - leaving about 1.1 billion shares held by institutions. Among the institutional holdings, there is a portion held by the index funds and value investors like Berkshire. I think there may be 1/3 of those holdings that are real "float". WMT still has over 4 billion dollars left on its buyback plan, enough to buy back about 90 million shares. Let's see which institutions are willing to let go their WMT shares. Right now, Fidelity and CGC together only have some 15 million shares left. Dodge and Cox has about 14 million, down from over 70 million in '07. So I'd say finally the end of tunnel is near - if WMT continues its buyback pace, there won't be enough shares for it to buy in 2 years from institutional holders - unless, of course, the price is a lot higher.
Right now, there is one more reason for the holders to stick to their shares - as the dividend yield is already higher than 1 or 2 year CD.
Why the Double Standard in Chinese vs. American Solar Stock Valuations? [View article]
Auditing is one thing - the transparent biz is another reason that the fraud is rare among solar companies. Simply put, c-Si based solar cos are in a supply/demand chain. The revenues of upstream companies are the cost of downstream ones. Also, most of the end customers (module buyers) are from abroad, thus eliminating the biggest source of accounting fraud - as you are not selling to your buddies. Finally, there are 11 Chinese solars - and it is not too hard to find a peer to compare if you want to verify quarterly earnings from any company. While this is not an accurate way to spot fraud, it does give one certain level of confidence.
Going back, there were tough times for the solars - and they had been forthright about the business environment. So while keeping a healthy dosage of skepticism is good, but letting the skepticism skew the investment judgement is bad given all the evidences so far.
9 Dividend Stocks Showing Investors the Money [View article]
Typical WMT bashing - tell me the management did a poor job by increasing EPS by almost 200% (3 times the 2000) during the period.
I am not saying WMT can not do better, but the EPS growth is stellar among DOW 30.
Being one of the most hated companies in the wall street, WMT actually does very well managing stores. My local WMT is more appealing than the TGT across the street and of course, has way more traffic. As a frequent WMT shopper, I rarely encounter poor services. Never had a problem with returns. If I have something to complain, it is the vanishing varieties on the shelf. As for price, it is not what used to be the rock bottom, but still better than peers. Dollar stores and Big-lots etc have lower prices, but they do not carry the varieties and the stores are usually less attractive.
Some good information here but it is a bit over-worried. The CEOs are not foolish as somewhat implied by the article. The new stores must not cannibalize old store sales. So far all the charts show that the SSS is staying stagnant despite the poor economy, while the total sales still show a slight growth. Therefore, I do see a slow-down in new stores for TGT/LOW/KSS. However, WMT stated its ambitious expansion plan - mostly the urban small format stores.
The current savings rate is about 6% and the consumer credit is contracting most of the time in the past two years. Record of low interest rates along with lower energy costs, food costs are helping the consumers in the time of hardship. Overall the Americans are once again rebuilding their household balance sheet and the pace is ahead of many industry watchers.
For the past year, the retail sales have been relatively flat - a surprising feat given the rise in savings rate from negative territory to the 6%, the high unemployment, the bust of the housing ATM, and the decreasing consumer credit. The resilience of the retail sales show that one should not underestimate the american consumers.
The Coming Bond Market Collapse: 3 Ways to Dodge the Damage [View article]
Inflation running amok and rates going much higher? I don't think so. We have a hollowed middle class and those old-time consumerism won't come back anytime soon. I am not saying there is gonna be minimal inflation - guess it will be low single digit mostly due to higher commodity and energy prices. The productivity gain and the strapped Joe, on the other hand, will certainly play as counterweights.
Income in a Zero-Rate World - Revisited [View article]
Canroys are winners long term - the BP fiasco will drive up the cost of ocean-based production. As long as oil price holds, land-based Canroys will flourish. The tax is a minor problem - most oil/gas companies pay taxes so the tax just put them on equal footing with peers.
First Solar Will Lose Value Through 2013 [View article]
Mostly worthless article - the author cannot tell why last year FSLR was $100+ and making huge profits while ESLR struggled for a survival.
The companies in solar space differs greatly and using ESLR and ENER as examples to show that FSLR is gonna fail is stupid.
Also, the EIA article quoted to show solar PV is expensive is outdated. The author is unaware of the great stride of PV in approaching grid-parity world-wide last year. PV is already in grid-parity in a few states in the U.S. PV also reached user-side grid parity in Germany and Italy.
Yes, there are issues with PV - rather than cost, grid-connectivity is now the bottle-neck. Requiring spare base-load generating capacity is another one. But we all should appreciate the fact that PV has largely eliminated the future energy crisis - with dwindling fossil fuel reserves, renewables are the only hope.
Where is the beef? Is OE really a big deal? Investing on stores, technology and expansion is necessary. The depressed WMT price is more related to some big greedy institutions (FMR, American Funds etc), less with the company.
Did That Scary Bond Bubble Just Pop? [View article]
Another article trying to use history to justify the low yield -- without a full understanding of what was happening then and what is happening now. Therefore, one can safely ignore whatever the conclusion...
Wal-Mart: A High Dividend Growth Stock [View article]
What about other retailers? I counter that given its sourcing experience and scale, WMT will likely get better deal than others. Plus, no retailer will eat the import cost increase by itself.
Therefore, I see minimal impact from China's rising wage to WMT's bottom line.
Are First Solar's Thin-Film Panels Falling Behind? [View article]
Few people know the real cost of c-Si solar panels. Analysts and even company CEOs continuously mislead. The reality is that Cd-Te modules still enjoys some cost advantage and that advantage is very hard for c-Si makers to catch up. Of course, c-Si panels still lead on efficiency (about 15% higher), the gap, though is looking to shrink a bit in the coming years.
In the past, I've written about the issue again and again. But now I completely lost interest... While FSLR has more important problems, the competitiveness of its Cd-Te panels is only a minor one. Contrary to the common belief, the true cost of c-Si panels did not fall by much during the last two years. Yes, for PV manufacturers, price fell but margin fell, plus, same thing happened to their suppliers. As a result, more than 90% companies in the c-Si manufacturing chain were and still are in the red. Only a few suppliers have positive net margin.
Shiller PE Continues To Mislead Investors, S&P 500 Is Fairly Valued In Early 2013 [View article]
Productivity gains and cost cutting have unintended consequences which are weak employment and weak wages, leading to weak income.
In the past, the extra workers were absorbed by new industries. Therefore, overall unemployment rate can remain low and economy keeps growing. However, things are different now. With the drastic slowdown in the emergence of new industries, productivity gains will inevitably cut into employment and it is no longer a pure blessing.
Additionally, the overcapacity and weak economy have significant impact on the pricing power and margins, so I think the overall earnings will be under pressure in the coming years. Of course, our economy is greatly helped by the capital brought in by wealthy foreigners. And that is likely the reason for the saying of 'never underestimating the US consumers". Still, how long can it last remains to be seen.
9 Dividend Stocks Showing Investors the Money [View article]
Just a note on my local WMT and TGT stores (suburban Houston). WMT store did a total remodeling and it is now more organized, visually appealing than TGT. The fixtures at WMT look better, and merchandise are more orderly. Frequently the shoe department at TGT have shoes misplaced and the clothing department is kind of dull. Of course, WMT has way more traffic than TGT.
I really like the management efforts to improve the stores. How long can Kmart/Sears hang on with minimal maintenance?
Apple's Growth Story Is Over [View article]
I use win-xp, no Mac or i-stuff. But I do not see a future for MS.
Wal-Mart: Good to Shareholders [View article]
The stagnant PPS can not be explained by the execution. For over 10 years, WMT consistently increased its earnings per share - making it one of the most consistently-performed companies in Dow 30. The EPS grew from $1.4 in 2001 to just over $4 in 2010. This year, EPS is projected to grow another 10% to about $4.4.
What really happened is: when WMT's growth slows, Fidelity/Capital Group Companies etc continuously unload their shares - even at a loss. Today Fidelity may have less than 1/10 WMT shares than it had 10 years ago while Capital Group may have less than 1/20. They took out the money and chase new momo stocks like RIMM/AMZN/AAPL etc. While RIMM/AMZN/APPL are good companies, lots of their other momo plays simply did not work out, such as Nortel, AOL, MCI-Worldcom etc. That's why these big funds seriously lag behind the index in the long run. There is a consequence by ignoring the simple and plain investment.
The good news is that with the share repurchase through cash flow and borrowings, the big institutions simply do not have many shares to sell. In 2010, WMT bought back some 280 million shares - leaving about 1.1 billion shares held by institutions. Among the institutional holdings, there is a portion held by the index funds and value investors like Berkshire. I think there may be 1/3 of those holdings that are real "float". WMT still has over 4 billion dollars left on its buyback plan, enough to buy back about 90 million shares. Let's see which institutions are willing to let go their WMT shares. Right now, Fidelity and CGC together only have some 15 million shares left. Dodge and Cox has about 14 million, down from over 70 million in '07. So I'd say finally the end of tunnel is near - if WMT continues its buyback pace, there won't be enough shares for it to buy in 2 years from institutional holders - unless, of course, the price is a lot higher.
Right now, there is one more reason for the holders to stick to their shares - as the dividend yield is already higher than 1 or 2 year CD.
Why the Double Standard in Chinese vs. American Solar Stock Valuations? [View article]
Going back, there were tough times for the solars - and they had been forthright about the business environment. So while keeping a healthy dosage of skepticism is good, but letting the skepticism skew the investment judgement is bad given all the evidences so far.
9 Dividend Stocks Showing Investors the Money [View article]
I am not saying WMT can not do better, but the EPS growth is stellar among DOW 30.
Being one of the most hated companies in the wall street, WMT actually does very well managing stores. My local WMT is more appealing than the TGT across the street and of course, has way more traffic. As a frequent WMT shopper, I rarely encounter poor services. Never had a problem with returns. If I have something to complain, it is the vanishing varieties on the shelf. As for price, it is not what used to be the rock bottom, but still better than peers. Dollar stores and Big-lots etc have lower prices, but they do not carry the varieties and the stores are usually less attractive.
Retailers' Reality Check Time [View article]
The current savings rate is about 6% and the consumer credit is contracting most of the time in the past two years. Record of low interest rates along with lower energy costs, food costs are helping the consumers in the time of hardship. Overall the Americans are once again rebuilding their household balance sheet and the pace is ahead of many industry watchers.
For the past year, the retail sales have been relatively flat - a surprising feat given the rise in savings rate from negative territory to the 6%, the high unemployment, the bust of the housing ATM, and the decreasing consumer credit. The resilience of the retail sales show that one should not underestimate the american consumers.
The Coming Bond Market Collapse: 3 Ways to Dodge the Damage [View article]
Income in a Zero-Rate World - Revisited [View article]
First Solar Will Lose Value Through 2013 [View article]
The companies in solar space differs greatly and using ESLR and ENER as examples to show that FSLR is gonna fail is stupid.
Also, the EIA article quoted to show solar PV is expensive is outdated. The author is unaware of the great stride of PV in approaching grid-parity world-wide last year. PV is already in grid-parity in a few states in the U.S. PV also reached user-side grid parity in Germany and Italy.
Yes, there are issues with PV - rather than cost, grid-connectivity is now the bottle-neck. Requiring spare base-load generating capacity is another one. But we all should appreciate the fact that PV has largely eliminated the future energy crisis - with dwindling fossil fuel reserves, renewables are the only hope.
Research In Motion Lags Behind Rivals As Competition Intensifies [View article]
Wal-Mart: Free Cash Flow Analysis [View article]
My valuation on WMT:
Base: 4.4*15=$66
Base+Growth 4.4*17=$75
Base+Growth+Quality/Moat 4.4*18=$79
WMT is grossly undervalued and I stick to my guns.
Did That Scary Bond Bubble Just Pop? [View article]
Wal-Mart: A High Dividend Growth Stock [View article]
Therefore, I see minimal impact from China's rising wage to WMT's bottom line.
Are First Solar's Thin-Film Panels Falling Behind? [View article]
In the past, I've written about the issue again and again. But now I completely lost interest... While FSLR has more important problems, the competitiveness of its Cd-Te panels is only a minor one. Contrary to the common belief, the true cost of c-Si panels did not fall by much during the last two years. Yes, for PV manufacturers, price fell but margin fell, plus, same thing happened to their suppliers. As a result, more than 90% companies in the c-Si manufacturing chain were and still are in the red. Only a few suppliers have positive net margin.
Shiller PE Continues To Mislead Investors, S&P 500 Is Fairly Valued In Early 2013 [View article]
In the past, the extra workers were absorbed by new industries. Therefore, overall unemployment rate can remain low and economy keeps growing. However, things are different now. With the drastic slowdown in the emergence of new industries, productivity gains will inevitably cut into employment and it is no longer a pure blessing.
Additionally, the overcapacity and weak economy have significant impact on the pricing power and margins, so I think the overall earnings will be under pressure in the coming years. Of course, our economy is greatly helped by the capital brought in by wealthy foreigners. And that is likely the reason for the saying of 'never underestimating the US consumers". Still, how long can it last remains to be seen.
9 Dividend Stocks Showing Investors the Money [View article]
I really like the management efforts to improve the stores. How long can Kmart/Sears hang on with minimal maintenance?