This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Wal-Mart Is a Long-Term Buy, No Matter What Happens on Thursday

NEW YORK (TheStreet) -- Wal-Mart (WMT - Get Report) is scheduled to report its second quarter earnings before the opening bell on Thursday.  Based on the stock performance in recent market action, Wall Street is not expecting positive results as Wal-Mart is down for the last day, month, quarter, and year of market action. For 2014, Wal-Mart is off by more than 3% with the S&P 500 (SPY) up more than 5%. 

Despite that, there are three reasons for long term investors to be bullish about Wal-Mart.

Even though it is the world’s largest retailer, Wal-Mart is adapting.

Same store sales have fallen for five consecutive quarters. But Wal-Mart is moving to open more of the smaller facilities, which have done better. It is increasing its own in-store health clinics which should do well thanks to The Affordable Care Act increasing the number of patients and the amount of spending for medical treatment. The emphasis on secondary cities in China should also be more profitable for Wal-Mart.

Revenue continues to rise for Wal-Mart.

Analysts expect revenues to come it at $119 billion, up from $116.9 billion, according to FactSet. Wal-Mart’s days as a high growth stock are over. But growth has been steady and is projected to increase: Finviz reports that earnings-per-share for the next five years is projected to be 8.60%. That tops the rate of -3.20% for this year and the 7.60% for the last five years. Not only is that a bullish trend, it is a huge turnaround from this year’s performance of nearly 12% in the right direction.

Hard as it may seem to believe, Wal-Mart is a great buy as a value stock for what it sells to customers and what it pays to shareholders.

The price-to-sales ratio for Wal-Mart is now 0.50. That means that every dollar of sales is going for a 50% discount in the stock price of Wal-Mart.  By contrast, the price-to-sales ratio of Dollar Tree (DLTR) is 1.44. For Dollar General (DG), it is 0.99. Family Dollar (FDO) has a price-to-sales ratio of  0.85.  Wal-Marts’ price-to-sales ratio is down more than 14% from its peak in both 2012 and 2013.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
WMT $71.98 0.00%
AAPL $121.30 0.00%
FB $94.01 0.00%
GOOG $625.61 0.00%
TSLA $266.15 0.00%

Markets

Chart of I:DJI
DOW 17,689.86 -56.12 -0.32%
S&P 500 2,103.84 -4.79 -0.23%
NASDAQ 5,128.2810 -0.5040 -0.01%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs