Ticker Shock: Four Reasons Why Wal-Mart Is Still Indestructible

A good night’s sleep, some cold medicine, a couple thousand milligrams of vitamin C, a half gallon of cranberry juice, and a dangerous quantity of Ricola cough drops and voila - cold is gone. I was worried I'd be under the weather for the weekend, but nothing can stop me now!

As a side note: Would anyone be disappointed if we never heard the words “stress test” again?

Asian stocks closed in the green. The Hang Seng was up more than 2% and the Nikkei was up more than 4%. Meanwhile, European stocks were in positive territory early this morning. And here in the US, we're currently trading higher.

Here's what I’m focused on this fine Thursday morning:

Wal-Mart (WMT):
 The discount retailer that needs no introduction reported its April sales numbers before the bell. Its same-store sales were up 5%. That was sharply higher than the 2.9% the Street had been expecting.

Even though it looks like the stock is going to gap higher at the open, I remain optimistic it can head even higher. Here's why I’m so bullish:

1. Wal-Mart is in a class by itself. Note that Target’s (TGT) April comps were up 0.3%.

2. Although I believe consumers will likely loosen their purse strings in the weeks and months ahead, I’m banking they’ll remain pretty frugal, which should play into Wal-Mart’s hands.

3. I’ve heard varying figures as far as how much cash is sitting on the sidelines. Whatever it is, if and when it gets deployed, I’m betting a lot of coin could go into Wal-Mart stock. Remember: The company's been performing, and remains the 800-pound gorilla in the discount space.

4. It trades at about 14 times the current year estimate. Not dirt-cheap like some of its merchandise (I mean that in a good way), but reasonable, given its market position. I think it will continue to out-duel its peers.

Cisco Systems (CSCO):
 The big-name (and at one point, high-flying) network-products company from California was out with its third-quarter results.

It put up $0.30 a share, excluding items, which was a nickel north of expectations.

There was some other good news, too:

1. It ended the quarter with more than $33 billion in cash/equivalents and investments, which gives it lots of options.

2. This line caught my eye in the release: “During the third quarter of fiscal 2009, Cisco repurchased 77 million shares of common stock at an average price of $15.57 per share for an aggregate purchase price of $1.2 billion.” I don’t think the company would have bought back stock unless it thought it was a good value.

3. Reuters quoted its chief executive John Chambers explaining how Cisco customers are describing their current business: "They are seeing some stabilization, a leveling out, or in other words, they are finally beginning to have something reasonably solid underneath their feet."

With all that in mind, here are some of my concerns:

1. The stock has had a nice little run over the last couple of months, so I’m concerned that we could see a bit of a pullback. I’m also thinking this market is getting kind of frothy.

2. The news is out. What’s the next catalyst?

I’d rather see another quarter or 2 of results before pulling the trigger.