With yearly sales of more than $450 billion, Wal-Mart (NYSE: WMT) is the world’s largest retailer. As the world’s largest retailer, Wal-Mart has all of those things that investors like Warren Buffett love: scale, negotiating power with suppliers, a very cost-efficient supply chain, and data dominance. That means that Wal-Mart is usually able to sell products less than the majority of its competitors. Warren and I both love the fact that Wal-Mart has a business that is easy to understand and that it has a significant competitive advantage over its peers: the ability to provide either the same or a comparable product at a lower cost. Although comparable sales are not looking so hot, there is no reason to believe that Wal-Mart will not continue to grow its top and bottom lines at a healthy and predictable 4-7%. That is why most analysts have a 12-month Hold rating on Wal-Mart, and a 5-year (or long-term outlook) rating of Buy. Overall, Wal-Mart is fairly valued, and it is a company that you could feel comfortable buying and holding.
Posted on: Tue, 24 Sep 2013 12:48:53 +0000
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