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.
Five winners of a weak dollar
For a quick-read on the U.S. economy, check the price of gasoline
Closing Bell: What Friday 13th curse? (ANF, BA, GENZ, DIS, PALM, PLA)
