Walmart Stock Has Lots of Room to Rise on International Growth

WalmartWalmart's (WMT) international operations segment continues to be the key growth driver for the company as its U.S. division has posted declining comparable-store sales for the eighth consecutive quarter. Wal-Mart competes with other big retailers like Target (TGT), Costco (COST), Amazon (AMZN) and Best Buy (BBY).

Our price estimate for Walmart is near $73, implying an approximately 37% upside to the market price.

International Expansion is Key for Growth

With the company recording sluggish results in developed markets, the developing world has become the growth driver for Walmart. This segment consists of retail operations in 14 countries generating 26.1% of net sales in 2011. Walmart's international segment has witnessed a substantial increase in its store count from 2,733 in 2007 to 4,557 in 2011 -- an addition of roughly 360 stores a year.

Geographically diversified operations also ensure a stable revenue stream for the company, as they tend to provide diversification benefits in terms of inflation or rising commodity costs in a particular region. The growing middle class in emerging economies such as India and China could provide substantial growth opportunities. Walmart could employ its well-known cost saving and technologically tested logistics systems in these nations.

Walmart has begun a series of acquisitions in order to build its presence in these countries. It recently entered into a minority stake of Yihaodian, a popular online retailer in China. The acquisition is aimed at further strengthening its presence in the region. In the African subcontinent, Walmart acquired a 51% stake in Massmart, a leading African retailer that runs nine wholesale and retail chains with approximately 288 stores in 14 countries in Africa.

See our complete analysis for Walmart stock here

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