Why Wal-Mart Is Poised to Outperform
Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, retail behemoth Wal-Mart Stores has earned a respected four-star ranking.
With that in mind, let's take a closer look at Wal-Mart, and see what CAPS investors are saying about the stock right now.
Bentonville, Ark. (1945)
Hypermarkets and super centers
CEO Michael Duke (since 2009)
CFO Charles Holley (since 2010)
Return on Equity (average, past 3 years)
$8.9 billion / $57.2 billion
Sources: S&P Capital IQ and Motley Fool CAPS.
On CAPS, 89% of the 7,087 members who have rated Wal-Mart believe the stock will outperform the S&P 500 going forward.
WMT has been under pressure from Amazon and Costco. But I believe WMT will continue to grow. All three will take market share from weaker retailers. WMT now pays a $1.88 annual dividend which at a present price of $74.95 gives them a dividend yield of 2.5% which in a low dividend environment is a pretty good yield. They generate good cash flow and their cash flow yield is currently 4.9%. They aren't trading for a bad value. In fact it is about the same as they traded during the recession. They are very stable and very consistent.
I think the investments they are making to develop their website will pay off and give Amazon a run for its money. It is Amazon's third party dealers that will keep Amazon strong. Both are going to do well going forward.
Wal Mart is also a real estate play with $113 billion in land and buildings. The land alone is worth $25 billion on the books which means it could easily be worth a lot more.
If you want market-thumping returns, you need to put together the best portfolio you can. Of course, despite a strong four-star rating, Wal-Mart may not be your top choice.
The retail space is in the midst of the biggest paradigm shift since mail order took off at the turn of last century. Only those most forward-looking and capable companies will survive, and they'll handsomely reward those investors who understand the landscape. You can read about the 3 Companies Ready to Rule Retail in The Motley Fool's special report. Uncovering these top picks is free today; just click here to read more.
The article Why Wal-Mart Is Poised to Outperform originally appeared on Fool.com.Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and Costco Wholesale. The Motley Fool owns shares of Amazon.com and Costco Wholesale. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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