Wal-Mart Stores, Inc. (NYSE: WMT) has not followed the trend of blue chip stocks that have seen 20% losses in the last few months along with the broad market. Indeed, WMT shares are up from just over $46 per share in January to over $56 per share today. WMT shares hit $63 just under a month ago, so yes -- they are down since September. So, what's going on? Why were Wal-Mart shares downgraded this week? Sentiment from the downgrade states that Wal-Mart is most likely not immune from the continuing economic situation in the U.S. (and worldwide, of course).
Prices will continue to rise, unemployment may get worse and growth may stall (of wait -- those are all already happening). When this happens, what do consumers do? Why, they flock to Wal-Mart, of course. The haven of low prices becomes a hideout in turbulent economic times, and the stock market must agree after looking at WMT share price trajectory in 2008.
Will Wal-Mart weather the storm? To a point, it already is. Sure, all retailers are expected to have a dismal holiday season this winter, but Wal-Mart will do better than the competition. It has more stores, more pricing leverage and more wherewithal to hold customers hostage with lower prices and inventory turns at a time when it's needed most. Perhaps we'll see WMT return to the $60/share level by Thanksgiving -- if not sooner.











Reader Comments (Page 1 of 1)
10-08-2008 @ 6:59PM
Shelley said...
Why is it that people wait for the analysts to downgrade vs. letting the market tell them already it may be time to get out of the stock. http://www.smartstops.net
10-08-2008 @ 7:37PM
jrg said...
As this crisis moves forward it will be obvious that they have sucked all the jobs out of the economy. They have put small busines out for the count and now of course ruined manufacturing in this country. We all can't work at walmart, but where can we get a job? This is marx's dictum of the rope. Only this one was made in china, I hope those walmart executives can understand why they have hung themselves and killed the golden goose that kept the world economy working. I hope for walmart to subside just like other large retailers of the past. Long live small business.
10-08-2008 @ 9:18PM
Mike said...
I'm thankful that Walmart exists. My family and I are watching every penny these days and we're able to save a fortune on the things we need just to get by. Food, dog-food, clothes for our toddler. We can't afford to shop at our local small grocer. Prices on something as simple as a box of cereal are as much as $2.00 more at the grocer than at Wal-Mart!! I'm sorry, but Cheerios are Cheerios. Why am I paying more at a corner grocer?
Thanks Walmart for making the downturn a little easier for my family to get through.
11-24-2008 @ 11:15PM
Lorna said...
As far as Walmart, it's a job, which we may need, but the workers aren't treated like Mr Walmart started it to be. What happened to MADE IN USA? There's where they have ruined our economy, buying from overseas. They have helped to put the little businesses out of business. Prices, just because #1 buys 5 of something and #2 buys 500 of the same product, the little guy pays more because he can't affort 500 which has been given a lower price for buying a large quanity. We all want a bargin. As far as I am concerned, they are a Monopoly and a big problem with our economy.
10-09-2008 @ 8:17AM
bdog 1939 said...
Thats bill clintons NAFTA working for you
10-09-2008 @ 8:31AM
bdog 1939 said...
you got it girl
10-09-2008 @ 8:46AM
Storygrandma said...
I wanted to buy software to install Microsoft Home and Office. Went to Walmart first thinking it would be cheaper there. Almost bought it, but didn't. Went to Staples. Guess what--about $50 cheaper there. Bought it from Staples. Moral: not everything is cheaper at Walmart. Be careful.
10-09-2008 @ 3:35PM
RoudMan said...
Oh ye of little faith. Wal-Mart will survive this slow down better than most just like it always has. I will hold my WMY stock as I have since 1981 and hope for the best.
RoudMan
10-09-2008 @ 3:54PM
ryan said...
There is the perspective that Wal-Mart has essentially crushed jobs by pushing out small business, but at the same time Wal-Mart has also served as a haven for consumers looking to save in a time like this. That's the dichotomy of Wal-Mart. But it seems like desperate times call for desperate measures. Especially with holidays around the corner, I think Wal-Mart is going to see an influx of new customers. Sentiment for Wal-Mart is bearish (http://www.predictwallstreet.com/forecast.aspx?symbol=WMT), but I predict it to become stronger very soon.
10-15-2008 @ 3:30PM
heartthrb said...
I love how people blame Wal-Mart for the manufacturing issues this country has... Funny, Wal-Mart doesn't impact the auto industry, yet BMW, Toyota, Hyundai, etc have moved plants here while we have shipped them to Canada or Mexico. Let's blame them for that too. Fact is, there aren't enough manufacturers making the products Wal-Mart sells to supply the huge demand. China has mastered this skill, at the future expense of it's environment perhaps. Either way, Wal-Mart may be a small piece of this puzzle, but putting the blame squarely on them is naive. Plus they have done a hell of a lot more for the environment and charities than a lot of other companies have done. Want someone to blame, look to Clinton first....then Congress.
10-22-2008 @ 2:02AM
JackSprat said...
Wal-Mart is too large to perish from this economic collapse. If the economy get worse, there will be a lot of retailers going under, primarily the mom & pops that cater to specific tastes. Comic book shops, bait & tackle stores, small grocery stores, clothing stores, and such.... But Wal-Mart will be the last refuge for those who no longer bring in the money to meet their basic consumable good demands.