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Horace Came To Town



October 10, 2007 – Comments (0)

I've been looking at retail stocks lately, having read at various sites that the coming recession and economic malaise is going to be a good thing for retailers. I haven't quite figured out why that is, I mean if we are really in recessionary times, and the economy is a mess because of the housing/credit meltdown, then why would people spend money they don't have, to buy stuff they don't need?

At any rate, this morning I took a peak at a retailer that I own 700 shares of, Wal-Mart Stores, Inc. (NYSE: WMT)

What They Do

The company operates more than 6700 retail stores worldwide. Let that soak in for a minute, I mean what a staggering number of stores. According to Reuters  the company operated more than 4,000 stores in the United States, more than 1600 in Mexico and South America, almost 300 stores in Canada, about 300 stores in the United Kingdom, and almost 400 stores in Japan.

What They Did

In addition to setting up shop in China, participating in the operation of 73 stores there via joint ventures, the company has also worked out agreements with the Indian government and is in the process of starting joint venture operations there.

Between the two countries, Wal-Mart is creating the opportunity for itself to be available to almost 3 billion people.  

My Value Estimate

I have Wal-Mart on my watch list with a Reasonable Value estimate of $52, giving me a buy target of $26, a first sell target of $50, and a close target of $55.

Market Opportunities

The stock closed recently at $45.21, with first support at $44.33 and first resistance at $47.06, which works out to about a 4% appreciation opportunity and about a 2% depreciation opportunity.

My Opinion

My opinion about Wal-Mart counts for little, as well it should, since I'm singularly the most clueless investor that ever looked for oil in their backyard. But because I'm pretty clueless, I have a tendency to examine stocks from a more conservative perspective, looking for the best place to invest my pennies that offers a reasonable return for a reasonable risk.

According to a 6 month CD is paying 4.55%, and that's a no risk 4.55%. Now look at the market opportunities for Wal-Mart, where the current upside is about a 4% gain. Hmmmm, which one should I choose? 

My Opinion

Given the current market dynamics, which is actually a polite way of saying it's often times better to be lucky than good, my rating for Wal-Mart is VIEW, as in view your Wal-Mart invested dollars staying about where they are, not really going up and not really going down. Just sort of hanging out, waiting for mom and dad to go out of town.


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