December sales grow over 2007 levels - so what's the beef?

It never ceases to amaze me how neurotic and short-sighted the stock market can be. If a public company misses earnings by a penny or two -- compared to what "analysts" think will happen -- stock prices can go up or down on a whim. Note that unless stock analysts can somehow predict the future, earnings are almost always going to not match expectations. If they always did, there would be no volatility in the market for many companies.

Wal-Mart, for all its retailer power, actually grew its sales last month. While its competitors were shutting down, reporting the worst sales in decades, complaining that "they've never seen this before" and so forth, Wal-Mart was quiet as scores of U.S. consumers flocked to its stores for every possible bargain on every possible product. Wal-Mart, just last week, indicated that its fourth-quarter sales would be dropping from its earlier estimate of $1.03 to $1.07 per share to $0.91 to $0.94 per share. Yes, even the world's largest retailer was not immune to the slowdown in consumer spending. It has been taking market share and sales from the competition, but the buying public is not just shifting purchases -- they are shrinking them across the board.

Wal-Mart can get slammed just like any other public company

Still, is Wal-Mart in bad shape? Of course not, but you'd never know it from looking at how the market tanked its stock last week. In a single swoop, WMT shares lost 8% after the December quarter revelations were revealed by the retailer. Wal-Mart will continue to take the lion's share of purchases in the retail market as consumers continue barely opening their wallets and purses this year. Wal-Mart's status as a blue-chip stock is in no danger at all.

Overall, Wal-Mart's same-store sales fell 0.1% over the five-week period ending January 5, 2009. The retailer blamed international weakness along with bouts if inclement weather in December that affected sales in many of its markets across the U.S. This is normal, seasonal stuff.

But, combined with the already-bad economy and weaker holiday spending by consumers, Wal-Mart's tumble in December was really not a tumble more than it "falling" even a tiny amount to cause a psychological backlash with investors. Heck, much of the market is driven with irrational decisions and short-term opportunists more than anything. Might as well involve the world's largest retailer for some fun.

Fundamentals are sound

Wal-Mart, though, is one strong company from a fundamental perspective. Like many shrewd investors, those wanting to make a buck in the long term dare not discount the power Wal-Mart has in the retail economy and the growing power it is wisely ramping up in markets outside the U.S. Let's be clear: I own no position in Wal-Mart long or short. Put simply, the world's largest retailer is called out in this weekly column for anything, good or bad. Like it or not, Wal-Mart has both rabid fans and detractors. Those who think it has destroyed main street and small towns should talk to those who would not survive very well if it were not for the retailer's low prices and programs.

But, if you're a Wal-Mart investor, what is your take on the company? Like every company, it rides the waves of the U.S. and global economy, and has to put up with the strange, short-term nonsense that can affect its share price from week to week. Apparently, nobody but Warren Buffett invests for the long term any more. Okay, that was just a statement to poke fun at, but sometimes it seems true.

Wal-Mart is not going anywhere. It's influence over retail in the U.S. in unequaled and so are its legions of fans and critics. One thing is for sure -- if you're a bull, you may want to consider betting on Wal-Mart's strong future.

See you right here next week for another edition of the Wal-Mart Weekly. Stay safe out there.