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Wal-Mart shares may propel over 10%
By Chris Burritt |
January 3, 2009, Saturday
|
Print Edition
Print Edition
WAL-MART Stores Inc, the world's biggest retailer, may be poised for share gains exceeding 10 percent for a second straight year as discounts on groceries and flat-panel televisions grabbed customers from Target Corp.
The chain's stock, which dropped in five of the past nine years, will probably advance 12 percent this year, following the 18 percent growth to US$56.06 that made it the best performer on the 30-member Dow Jones Industrial Average in 2008, according to analysts' estimates compiled by Bloomberg News.
"After several years of famine, we're looking for a few years of feast," said John McMillin, a New Jersey-based analyst at Lord, Abbett & Co, which owned 15.2 million Wal-Mart shares through September among US$70 billion in assets. "Wal-Mart is more than a one-year story."
While the United States recession deepened last year, Wal-Mart climbed the most since 1999 as it started to sell US$4 medicines and reduced prices on groceries, jeans and other basics to attract more US customers. The company is extending discounts on laundry detergent, vacuum cleaners and fresh foods into 2009, and adding products such as Apple Inc's Web-surfing iPhone.
Wal-Mart will report sales growth for the next three quarters, while Target's revenue will decline or remain little changed, according to analysts' estimates.
Mike Duke, formerly head of Wal-Mart's overseas units, takes over as chief executive officer on February 1 from H. Lee Scott, under whose nine-year tenure the company's shares lost 16 percent. Following three years of declines, the stock rose 2.9 percent in 2007 as store renovations, better merchandise and price cuts helped boost sales. Duke aims to spur growth with apparel, home furnishings and overseas growth, including plans to buy Chile's largest grocery chain, Distribucion y Servicio D&S SA.
"For the first half of 2009, people are still going to be focused on value, and that's Wal-Mart's prime thing," said Janna Sampson, co-chief investment officer at Oakbrook Investments LLC in Illinois.
The chain's stock, which dropped in five of the past nine years, will probably advance 12 percent this year, following the 18 percent growth to US$56.06 that made it the best performer on the 30-member Dow Jones Industrial Average in 2008, according to analysts' estimates compiled by Bloomberg News.
"After several years of famine, we're looking for a few years of feast," said John McMillin, a New Jersey-based analyst at Lord, Abbett & Co, which owned 15.2 million Wal-Mart shares through September among US$70 billion in assets. "Wal-Mart is more than a one-year story."
While the United States recession deepened last year, Wal-Mart climbed the most since 1999 as it started to sell US$4 medicines and reduced prices on groceries, jeans and other basics to attract more US customers. The company is extending discounts on laundry detergent, vacuum cleaners and fresh foods into 2009, and adding products such as Apple Inc's Web-surfing iPhone.
Wal-Mart will report sales growth for the next three quarters, while Target's revenue will decline or remain little changed, according to analysts' estimates.
Mike Duke, formerly head of Wal-Mart's overseas units, takes over as chief executive officer on February 1 from H. Lee Scott, under whose nine-year tenure the company's shares lost 16 percent. Following three years of declines, the stock rose 2.9 percent in 2007 as store renovations, better merchandise and price cuts helped boost sales. Duke aims to spur growth with apparel, home furnishings and overseas growth, including plans to buy Chile's largest grocery chain, Distribucion y Servicio D&S SA.
"For the first half of 2009, people are still going to be focused on value, and that's Wal-Mart's prime thing," said Janna Sampson, co-chief investment officer at Oakbrook Investments LLC in Illinois.
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