| Fri, Sep 07, 2007 |
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Wal-Mart: Acquisitions? (WMT, rated BUY)
Some interesting thoughts about Wal-Mart
(WMT) ?
The stock hit an 8 yr. low today despite earnings over those same 8 yr's going in the opposite direction, up. Eight years ago Wal-Mart traded for the $42 a share it hit today and earned $1.25, this year it will exceed $3 a share in earnings and trade for the same $42. Hmmm.
Recently Wal-Mart said it is considering new store sizes and types in the U.S. market but played down the possibility of acquisitions as it faces slowing sales growth at its older stores and the expected new competition from British rival Tesco PLC. I am not sure why a new rival would dampen acquisition plans but that it what they said. They also said they are hiring managers for a team to consider new formats besides the retailer's four established types, Wal-Mart discount stores, Supercenters that combine groceries and general merchandise, Sam's Club membership stores and Neighborhood Market grocery stores.
On the international stage Wal-Mart has been buying retail chains and entering joint ventures all over the world to improve its exposure and it has worked, really well. Now, with same store sale in the U.S. in trouble, why not try the same strategy in the U.S. as well?
According to a recent article in the Financial Times, with Tesco moving into the U.S. with its "Fresh & Easy" small format neighborhood groceries soon, Wal-Mart may think that it cannot afford to ignore the success of niche stores. If Wal-Mart is going to try to take on Tesco, or, meet them at the gate when they arrive, there are several retailer operators that should end up on Wal-Mart's radar despite their claims to the contrary.
One could be Whole Foods (WFMI) , which is about to merge with competing organic food chain Wild Oats (OATS) . While a great idea, it would make a "organic food" powerhouse and draw the attention of the FTC. But, with the FTC's track record recently, this may just end up being more of an annoyance than legitimate opposition. Other possibilities are Kroger (KR) , which has a market cap of over $19 billion and annual sales of over $66 billion or Safeway (SWY) at a $13 billion market cap and $40 billion in sales. Wal-Mart's market cap is a cool $179 billion, swallowing any of the four would be real easy.
What to do? I am buying more shares for starters. Currently Wal-Mart is dismally run and Lee Scott is not long for his job. That being said, the company is a money making machine and will only get bigger once management gets it's head out of it's, well, you know where. If you were being offered another asset that has almost tripled it's annual earnings for a price it sold at 8 years ago, wouldn't you jump at the chance to buy it?
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SocialPicks
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| Thu, Sep 06, 2007 |
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Wal-Mart Moving in on More Acquisitions
Some interesting thoughts about Wal-Mart (WMT)
The stock hit an 8 yr. low today despite earnings over those same 8 yr’s going in the opposite direction, up. Eight years ago Wal-Mart traded for the $42 a share it hit today and earned $1.25, this year it will exceed $3 a share in earnings and trade for [...]
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Stock Market News & ...
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Wal-Mart: Acquisitions?
Some interesting thoughts about Wal-Mart
(WMT)?
The stock hit an 8 yr. low today despite earnings over those same 8 yr's going in the opposite direction, up. Eight years ago Wal-Mart traded for the $42 a share it hit today and earned $1.25, this year it will exceed $3 a share in earnings and trade for the same $42. Hmmm.
Recently Wal-Mart said it is considering new store sizes and types in the U.S. market but played down the possibility of acquisitions as it faces slowing sales growth at its older stores and the expected new competition from British rival Tesco PLC. I am not sure why a new rival would dampen acquisition plans but that it what they said. They also said they are hiring managers for a team to consider new formats besides the retailer's four established types, Wal-Mart discount stores, Supercenters that combine groceries and general merchandise, Sam's Club membership stores and Neighborhood Market grocery stores.
On the international stage Wal-Mart has been buying retail chains and entering joint ventures all over the world to improve its exposure and it has worked, really well. Now, with same store sale in the U.S. in trouble, why not try the same strategy in the U.S. as well?
According to a recent article in the Financial Times, with Tesco moving into the U.S. with its "Fresh & Easy" small format neighborhood groceries soon, Wal-Mart may think that it cannot afford to ignore the success of niche stores. If Wal-Mart is going to try to take on Tesco, or, meet them at the gate when they arrive, there are several retailer operators that should end up on Wal-Mart's radar despite their claims to the contrary.
One could be Whole Foods (WFMI), which is about to merge with competing organic food chain Wild Oats (OATS). While a great idea, it would make a "organic food" powerhouse and draw the attention of the FTC. But, with the FTC's track record recently, this may just end up being more of an annoyance than legitimate opposition. Other possibilities are Kroger (KR), which has a market cap of over $19 billion and annual sales of over $66 billion or Safeway (SWY) at a $13 billion market cap and $40 billion in sales. Wal-Mart's market cap is a cool $179 billion, swallowing any of the four would be real easy.
What to do? I am buying more shares for starters. Currently Wal-Mart is dismally run and Lee Scott is not long for his job. That being said, the company is a money making machine and will only get bigger once management gets it's head out of it's, well, you know where. If you were being offered another asset that has almost tripled it's annual earnings for a price it sold at 8 years ago, wouldn't you jump at the chance to buy it?
Me too.
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Todd Sullivan's - Va...
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| Fri, Aug 24, 2007 |
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Today's Key Market News - Dangerous Durables Data
(Stocks in this article: NYSE: F, NYSE: HNZ, NASDAQ: WFMI, NASDAQ: OATS, NYSE: ANN, NASDAQ: BEBE, NYSE: BKC, NASDAQ: CSUN, NYSE: TRB)
July's Durable Goods Orders were reported today, and the measure was well ahead of expectations. Before you get too excited, lets consider that this data reflects business sentiment in July and may not be appropriate for current economic conditions. In fact, it may well be dangerous.
Heavy ordering can set the stage for sell-through failure, and support the turn to recession. If sell-through does not follow, retailers face price reduction, earnings shortfall and potentially business consolidation. Now, durables are supported by international demand, there's no doubt. Still, we expect much of the drivers behind the data reflect overly optimistic domestic demand expectations at just the wrong time for it. After all, what are consumers going to do with these newly ordered washing machines if they can't even afford to pay their electric bill, or if they don't have a home to place them in?
Within the "Market-Moving News" below, and in our similar sidebar section, you will find an article that shows PIMCO's Bill Gross agrees with our view on the government's role in staving off recession. Bill and I agree that weakened consumer demand, stemming from the many stresses on the poor little fellow, least of which are housing costs and loss of home equity, are likely to drive the economy into recession. If the government or its agents (read Fed) can do something to provide support here, it has broader implications to our economy on the whole.
Market-Moving News
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Wall Street Greek
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| Mon, Aug 20, 2007 |
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Monday's Upgrades and Downgrades
Here are the calls
UPGRADES
Flowserve FLS RBC Capital Mkts Sector Perform » Outperform
Taiwan Semi TSM UBS Neutral » Buy
NN Inc NNBR BB&T Capital Mkts Hold » Buy
Clear Channel Outdoor CCO Bear Stearns Peer Perform » Outperform
JB Hunt Trans JBHT Wachovia Mkt Perform » Outperform
Lamar Advertising LAMR Bear Stearns Peer Perform » Outperform
Melco PBL Entertainment MPEL Citigroup Hold » Buy
CenterPoint CNP Citigroup Hold » Buy
Agrium AGU CIBC Wrld Mkts Sector Perform » Sector Outperform
Orbitz OWW Soleil Hold » Buy
Sharper Image SHRP BMO Capital Markets Underperform » Market Perform
Autodesk ADSK Bear Stearns Peer Perform » Outperform
SAP AG SAP JP Morgan Underweight » Overweight
Blockbuster BBI JP Morgan Neutral » Overweight
CACI Intl CAI JP Morgan Underweight » Overweight
Home Depot HD UBS Sell » Neutral
Abercrombie ANF Friedman Billings Mkt Perform » Outperform
Nice Systems NICE Friedman Billings Mkt Perform » Outperform
Kohl's KSS Deutsche Securities Hold » Buy
Countrywide CFC Banc of America Sec Sell » Neutral
DOWNGRADES
Gerdau AmeriSteel GNA Soleil Buy » Hold
McGraw-Hill MHP JP Morgan Overweight » Neutral
Wild Oats Mkts OATS Bear Stearns Outperform » Peer Perform
WNS WNS JP Morgan Overweight » Neutral
Huaneng Power HNP Citigroup Buy » Sell
SL Green Rlty SLG UBS Buy » Neutral
Boston Prpts BXP UBS Buy » Neutral
Darden Restaurants DRI Bear Stearns Outperform » Peer Perform
ChoicePoint CPS Sun Trust Rbsn Humphrey Neutral » Reduce
Curtiss-Wright CW CIBC Wrld Mkts Sector Outperform » Sector Perform
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