Topic: Growth Stocks

WAL-MART STORES INC. $59 – New York symbol WMT

WAL-MART STORES INC. $59 (New York symbol WMT; Conservative Growth Portfolio: Consumer sector; Shares outstanding: 3.4 billion; Market cap: $200.6 billion; Price-to-sales ratio: 0.5; Dividend yield: 2.5%; TSINetwork Rating: Above Average; www.walmart.com) is buying 51% of Yihaodian, a Chinese company that sells groceries, clothing, consumer electronics and other goods over the Internet.

Wal-Mart did not say how much it is paying for this investment, but it already owns a minority stake in Yihaodian. This familiarity cuts the risk of an unpleasant surprise. As well, Wal-Mart’s expertise will help this company expand sales and cut costs. The deal should close later this year.

This is the latest in a series of acquisitions that have expanded Wal-Mart’s overseas operations. That’s helping it offset slower growth in the U.S., which accounts for 60% of its overall sales.

In its 2012 fiscal year, which ended January 31, 2012, sales rose 5.9%, to $443.9 billion from $419.0 billion in 2011. International sales rose 15.2%, or 8.5% if you disregard acquisitions and foreign exchange rates. Sales in the U.S. rose 1.5%. Earnings per share rose 10.3%, to $4.49 from $4.07.

Wal-Mart’s earnings will probably rise to $5.40 a share in fiscal 2013, and the stock trades at a low 10.9 times that estimate.

Wal-Mart is a buy.

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