What’s With Wal-Mart?

• Posted by Robert Sinn
• on July 11th, 2012

Have you noticed that $WMT has become the new “market leader”?  Since May 17th the stock is up nearly 22% and has tacked on over $40 billion in market capitalization:

 

In fact the recent rally in Wal-Mart is beginning to look a lot like the parabolic surge we witnessed in $AAPL shares earlier in the year:

 

So why the big run-up in the shares recently? A few likely explanations are as follows:

• WMT is perceived as a defensive name and given its large market capitalization WMT is an attractive place for large players to hide out
• The large decline in gasoline prices has given US consumers more available spending power
• Impressive Q1 results combined with roll back of promotional activities and evidence of margin improvements

While WMT’s prospects have improved in recent months the current share price likely already reflects much of that improvement. It is also worth noting that the last time WMT shares had anywhere near the performance of the last two months was during 2008 – the 2008 rally ended the week before the Lehman Brothers bankruptcy……

 

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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