Wednesday, January 3, 2007
Would Jesus shop at Wal-Mart?
That was the question posed on a Saturday morning Fox News business shows a few weeks back.
The insinuation, of course is that Wal-Mart is evil and no God-fearing Christian would be caught dead in the store.
Apparently, a lot of God-fearing Christians don’t watch Fox News since Wal-Mart blew away its sales forecast for December. And that sparked a rally in the S&P 500 futures market Tuesday morning.
In reality, companies are neither good nor evil. Companies are simply the byproduct of thousands of human efforts. If those efforts are productive, then companies are rewarded in the marketplace. On the other hand, if those efforts are corrupt, then the marketplace has a way of dealing with that as well.
Since Wal-Mart is the biggest and most successful retailer in the world, I’d guess it probably does a bit more good than evil. That’s not to say that Wal-Mart hasn’t made mistakes. Indeed, few companies can claim moral perfection.
But there’s a reason why millions of people shop at Wal-Mart. There’s a reason why millions of people work for the company. There’s a reason it has grown so large. And there’s a reason why hundreds of thousands of small businesses clamor to get their products onto Wal-Mart shelves.
And it’s not because Wal-Mart executives made a deal with the devil.
I don’t know if Jesus would shop at Wal-Mart. But if he were around today, I’d advise him to buy the stock... or to make an even better trade.
At $46 per share, Wal-Mart trades at just 14 times 2007 earnings estimates. That’s the bottom of its historical valuation range. And it’s unlikely to stay at that level for much longer.
Wal-Mart shares are the same price today as they were six years ago. But the company is much, MUCH bigger, has MUCH higher earnings, and is going to grow even more in 2007.
Wal-Mart recently announced deals to expand its presence in both China and India. That’ll make Wal-Mart the fastest growing retailer in the two fastest growing countries. And that’s exactly the type of catalyst that’s needed to kick-start Wal-Mart shares.
Perhaps rather than asking if Jesus would shop at Wal-Mart, the more relevant question is...
Would Buddha shop there?
Best regards and good trading,
Highest yielding Dow stocks right now:
Pfizer - 4.5%
Verizon - 4.4%
Altria - 4.0%
AT&T - 4.0%
Citigroup - 3.5%