Wal-Mart (WMT)

The Business

Wal-Mart Stores, Inc. operates retail stores in various formats worldwide. It operates in two segments, Wal-Mart Stores and SAM’S CLUB. The Wal-Mart Stores segment comprises supercenters, discount stores, and neighborhood markets, as well as an online retail format, Walmart.com. It offers apparel for women, girls, men, boys, and infants; domestics, fabrics, and notions; stationery and books; shoes; housewares; hardware; electronics; home furnishings; small appliances; automotive accessories; horticulture and accessories; sporting goods; toys; pet food and accessories; cameras and supplies; health and beauty aids; pharmaceuticals; jewelry; and optical, as well as photo processing services. The neighborhood markets include dry grocery, meat, produce, deli, bakery, dairy, frozen foods, pharmaceuticals, photo processing, health and beauty aids, household chemicals, paper goods, general merchandise, and pet supplies departments. The SAM’S CLUB segment comprises the warehouse membership clubs in the United States and samsclub.com. It offers hardgoods, softgoods, software, electronics, jewelry, sporting goods, toys, tires, stationery and books, grocery items, and selected private labels. As of January 31, 2006, the company operated 1,209 discount stores, 1,980 supercenters, 567 SAM’S clubs, and 100 neighborhood markets in the United States and internationally. It operated 11 units in Argentina, 295 in Brazil, 278 in Canada, 88 in Germany, 398 in Japan, 774 in Mexico, 54 in Puerto Rico, 16 in South Korea, and 315 in the United Kingdom, as well as 56 stores through joint ventures in China, as of the above date. Wal-Mart Stores was founded in 1945 and is based in Bentonville, Arkansas.

Wal-Mart hit a low of $42 back in mid July when the fear of inflation was in the mind of Wall Street and had a brief recovery to $52 before coming back down to its current price of $46 creating another buying opportunity. It currently trades at $46 with a P/E of 17. This P/E is well below its 5 yr average of 23 and the markets P/E of 20. When measured by price-to-book value, it is currently at 3.5 times book value. Its trailing twelve months free cash flow of 3.5 billion will allow it to survive tough times and expand into emerging markets. It’s current growth rate will be kept as the company expands domestically and into emerging markets. Wal-Mart also has the ability to allow stores to sell groceries. In addition, managements hopes to expands into the pharmacy business by offering certain generic drugs for $4. Don’t worry the Walton family still control’s most of the companies inside stock. The stock IMO the stock is worth $65.

Disclaimer: I own shares of Wal-Mart