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Six Reasons Walmart May Be the Best Retailer Ever

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It's nearly impossible to imagine another company bumping it out of the top spot.

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If you were asked to name the best overall retailer of all time, which company would you go with? Macy's (M)? JC Penney (JCP)? Or perhaps you'd fancy online retailer Amazon (AMZN), which has quite a history and arguably a very bright future.

For me, it's Walmart (WMT). While its stores aren't the most appealing to the eye, its ability to offer up incredibly low prices, its huge footprint, its popularity among the middle class, and its vast untapped potential is what does it for me. And from an investment standpoint, I think it's a solid deal, too. In fact, here are some of the things that pique my interest as I write this. (Note that the retail giant's third-quarter earnings are due out on November 12.)

1.
Right off the bat, Walmart's registers are going to be ringing big-time over the next few months due to "Black Friday" and the holiday season. The reasons: Again, its crazy low prices, the company's aggressiveness in promoting its merchandise for the holiday season, and its physical convenience to a large number of financially struggling citizens looking to make their money go as far as possible during this season of giving. There's a chance that along with its numbers, management may paint a pretty picture of the next few months.

2.
Just because something happened once is certainly no guarantee it will happen again. But all things considered, I'd rather go with a retailer that's pretty consistently beat the Street. Walmart has zipped past expectations in three of the last four quarters, and I suspect it will do so again in the to-be-announced third quarter.

3. The shares look like a heck of a bargain. At 14.3 times this year's estimate, how can I turn my head? Actually it's a steal compared to department chain JC Penney, which trades at more than -- get this -- 29 times this year's estimate.

4. From the big-picture standpoint, I still think it has a tremendous chance to grow its presence and brand outside of the US. And while I'm not naïve, realizing that retail is likely to be cutthroat for at least as long as I'm alive, what company is going to come along and bump Walmart out of its top spot? What company has the money and the potential to deliver cost savings on such a wide variety of stuff?

5. Here in the States, its low-cost prescription program will continue to bring more consumers in to its locations. This is especially true with the economy still in such a fragile state.

6. It appears that a director, James Breyer, bellied up (indirectly) at around the same price back in August. I don't know about you, but I feel a warmth just knowing that I could saddle up at about the same price as someone so knowledgeable about the company.

Long story short: I'm a bull on Walmart, both in the short run and for the long haul. I think its stock is under appreciated and believe the stock in the low $50s presents a terrific opportunity.

Editor's Note: See also, Wal-Mart: The Leaders We Deserve.


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No positions in stocks mentioned.

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