Should I Buy Wal-Mart Stock? Investment Predictions for 2012

Jan 10, 2011
James Hutchinson

What Stock Should I Buy? - Adam Borkowski

Should investors looking for profits consider investing in Wal-Mart stock right now? Those that have owned it in 2011 had a slight gain.

Wal-Mart is the large American company with a big presence in many countries, primarily known as a low-cost retailer. The stock for the company sells on the New York Stock Exchange, under the stock symbol WMT. Investors looking for safe and stable returns may want to consider the stock, but shouldn’t expect large short term profits.

Wal-Mart is part of both the Dow 30 and S&P 500. It is one of the largest companies traded on the NYSE at a market capitalization of over $192 billion at this point. Market cap is the value of the company in terms of its available shares times the market price. At Wal-Mart’s current price, this results in over 3.5 billion shares.

Companies with this large a market cap and outstanding shares require large events to move the price a significant amount. Since the company is part of the two large indices, changes in the overall market will be reflected in the stock, since large Exchange Traded Funds (ETFs) and mutual funds own the basket of stocks in these indices.

Wal-Mart Stock Price History

Investors can use the historical price of a stock to get some indication of future price moves. This should only be used as guide as outside factors or major company events can cause the stock to move differently than in the past.

In the past year of 2011, Wal-Mart traded from a low of $48.31 to a high of $60.00. The stock had a slow decline in the first half of the year to reach its low and then recovered to the current price of $59.83. WMT ended up 11% for the year, better than that if you include dividends.

Investing for Dividends

This company currently pays a dividend on its stock of $1.46 (up from last year), which computes to 2.5% based on its current stock price. 2.5% is higher than short term fixed investments, but below long term investments, and would be eaten up quickly by a decline in the price of the stock.

Analyst Opinion on Wal-Mart

According to the Yahoo! Finance website, 25 analysts rate Wal-Mart stock at an average rating of 2.3, which is strong buy, with an average price target of $62. The company is subject to economic risk.

If the economy improves, consumers may be able to purchase higher quality goods from other retailers. If the economic conditions result in a double-dip recession, the fact that Wal-Mart is tied to the major indices may be a negative. Wal-Mart also has received negative press attention. For information, you can contact Wal-Mart Investor Relations directly at (479) 273-6463.

Prediction for Wal-Mart Stock for 2012

Walmart has had a solid run in the second half of the year. In a questionable economy, it is a stable performer with a respectable dividend. If the market takes off, WMT will probably underperform, but there is a place for the stock in a diversified portfolio. .

Disclosure: The author has no position in Wal-Mart as of the time of this article.

James Hutchinson - Jim is a writer with diverse interests in business, sports and travel.

Comments

Jan 11, 2011 7:26 AM

David A. Todd :

Hutch: I'm sitting about 3 miles from W-M home office in Bentonville, AR (I don't work for them, or even own any of their stock). Thank you for a balanced article. Perhaps W-M stock would be good for some covered calls.

Jan 18, 2011 5:12 AM

Daniel Peters :

Great piece. Keep up the good work Hutch!

Jan 25, 2011 4:23 PM

Guest :

Since this article was published WMT moved from 54 to 57 > 5% in two weeks and expected to hit the 60 mark by march ,,6/54 > 10% in 3 Months. Give me a break this article is pure rubbish, Not much of an analyst.

Feb 18, 2011 8:19 AM

James Hutchinson :

Just to follow up on the guest's comment. Wal-Mart has dropped back under 55. It has fluctuated in a range.

I did want to follow up on the "it's expected to hit $60" part of the comment. What people "expect" to happen is really worthless. If people really felt it was going up to $60 tomorrow, it would be at $59.99 today. Don't buy a stock on what people "expect" it to do.

Mar 9, 2011 10:49 AM

Guest :

January 01, 2000 share price was sitting at $69.12 with inflation it would have to be sitting north of $85 today just to be at even money.
"It is the aim of good government to stimulate production, of bad government to encourage consumption." - Jean Baptiste Say

If Retail makes NOTHING....and Government makes only MORE DEBT....the only thing that can have a positive effect on communities is Small Business and companies that make stuff.

The picture of George Washington can float around a town six to eight times before leaving the community but if that dollar is spent inside of a big box store it will leave the same day that it entered.

Big Box stores like Wal*Mart can take in 200,000 George Washington's a day and that be a lot of "Liberty" "Pride" "Freedom" leaving town each day.

And when one figures into the equation America has a six to one trade deficit with China which means five out of every six George Washington's that go there will never come back unless the US Government sells bonds(debt) this is what those on Jenkins Hill and Wall Street don't understand when it comes to local banks not having any George Washington's to loan out in their communities.

Why is it that people ain't writing articles about those fifteen cargo ships that pollute as much as 760 million automobiles, T Boone Pickens owning a Texas Water District, Nestle draining the Great Lakes, the disconnect between Coca-Cola and the people of India, Wal*Mart putting less than 5% foreign in their stores in China and Warren Buffett buying a Choo Choo train a few years after Wal*Mart makes a deal on a port in Mexico.

In 1960 U.S. goods manufacturing produced a $5 billion trade surplus - - 2006 merchandise trade had a $836 billion deficit. Today, for some reason, the world thinks the American consumer needs to support what they make....well, it doesn't work like that even a fifth grader can figure that out.

So-call cheaper items only breed cheaper wages and this will go on until the rich of the world carry out the manufacturing of ignorance through out the 182 or so counties that will have a chance to make something.

I'm just an O'fart with very little book learning but from what I've seen over the past sixty five years in this great union of fifty states has shown me that common sense left in the year 63' and "my sh!! don't stink" sense as been here every since.

Sad, those few fat farmers with penmanship of poets holding feather quill goose pens and writing the American dream has today become nothing more than a page within a history book that a bunch of asinine dipsticks are to lazy and ignorant to teach.

Over the past 100 years the Federal Debt has gone from $2.6 billion in 1910 to over $14 trillion today....In that time there has only been one 10 year period that the debt has gone down 1920-1930.

All done by a bunch of elephants and jack@sses acting like turnips. People today still think Clinton balance the budget but anyone knows if they think with an open mind that if the budgets of the Clinton years had been balance the debt would had not gone up.

America is over $57 trillion in debt and it didn't get there by people using common sense. If the American people don't wake-up to that fact within another twenty years they will witness Lady Liberty kneeling to her knees in the Hudson and someone in Tiananmen Square holding that tablet from under her left arm celebrating what is written upon it.

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