NEW YORK (Real Money) -- Can you feel better about a stock after the CEO who lowered the boom on it tells you he can reaccelerate the company's revenue by taking earnings down? That's kind of the picture that Wal-Mart (WMT) - Get Walmart Inc. Report Doug McMillon laid out for me on Wednesday's Mad Money. While I find it credible, I think it's going to be a hard slog and we won't see any results for some time.
First, I can't imagine the holiday season is going to be a boomer for these guys. I think they are losing share to others even as McMillon wasn't willing to go there. Second, given the compensation packages that the other guys are offering in brick-and-mortar, guys like Costco (COST) - Get Costco Wholesale Corporation Report , I don't think you can reinvent on the fly. (Costco is part of TheStreet'sAction Alerts PLUS portfolio.)
However, I will say this: The expectations in earnings are so low and the ratings for the company, the internal customer ratings, are so much higher than they were a year ago, that I think good things could happen here.
The big issue, though, for me is Amazon (AMZN) - Get Amazon.com, Inc. Report . I think that when Amazon raised the price of its Prime offering and didn't have anyone blink, that was a sign to me that the convenience and low price of Amazon trumps the convenience and low price of Wal-Mart, and competing on price and on slightly better customer service just might not work. The investing thesis you would be operating on is that McMillon lowered the bar to the point that it would be really difficult not to beat the numbers. (Amazon is part of TheStreet'sGrowth Seeker portfolio.)
As I said on Mad Money, it is do-or-die for Wal-Mart. He either invests or maybe you do get a Woolworths or a Grants. When I was growing up, Woolworths was the place we shopped. The five-and-dime. They were everywhere, and as pervasive as the Atlantic & Pacific Tea Co., which was, frankly, the only supermarket I ever knew until I was about 8.
Do you want to invest in a do-or-die situation? Or do you want to invest in a situation that looks like it can be fixed a few quarters from now?
I think that you stay patient. Let this not-so-hot quarter pass. Let the investments take root. Maybe if it goes down to 4% yield, which will be safe given the balance sheet, despite the buyback, you can make a case for it.
But there's no hurry. The only hurry is on Doug's side of the field. Not yours.
Editor's Note: This article was originally published at 7 p.m. EDT on Real Money on Oct. 14.
<I>At the time of publication, Cramer's Action Alerts PLUS had a position in COST.</I>