Wal-Mart: Discount Store, Discounted Stock?

As GuruFocus updates the stock buys and sells of gurus, Wal-Mart (WMT), the discount retail giant, stands out as the stock with a high ValueRank (7 out of 10). Just recently, Clipper Fund's James Gipson and T. Rowe Price Equity Income Fund's Brian Rogers bought Wal-Mart.

Oakmark's legendary fund manager Bill Nygren was the first guru that bought Wal-Mart. He bought at price of $53 a year ago. Bill Ruane, the Graham-and-Doddsville superinvestor recognized by Warren Buffett, bought about 700,000 shares Wal-Mart at similar price in the fourth quarter of 2004. As the stock price drifted down, he added another 380,000 shares, bringing his total holdings to 1.1 million shares. In the last quarter, James Gipson purchased 2.8 million shares of Wal-Mart for his famed Clipper Fund, and Brian Rogers bought 4 million shares of Wal-Mart for his $19 billion T. Rowe Price Equity Income Fund.

The price of Wal-Mart did not go up, not yet. If an investor buys Wal-Mart today, he pays a lower price than what Bill Nygren and Bill Ruane had paid. If he is patient enough and holds the stock until the price appreciates (finally), he will beat these best investors on this investment.

Is Wal-Mart a good buy? It is certainly a much better buy than it was 5 years ago, when the stock was priced at $70 and a price/earnings ratio of 55. During the last 5 years Wal-Mart's earnings have doubled, but the stock has fallen to $49, giving it a P/E of 18.

This is what Bill Nygren has to say about Wal-Mart's P/E ratio: "That's the same earnings multiple as the market average, that only makes sense if you think Wal-Mart is an average company." And he doesn't. Wal-Mart is rapidly gaining market share in its grocery business, and profit margins for its Sam's Club are improving. Bill Nygren also likes Wal-Mart's share-repurchasing plan: "We expect to see an increase in share price on a decreasing share base," he says. "And obviously, the company believes that the stock at this price is an attractive investment."

Going to Wal-Mart for its "Everyday Low Prices"? Check if its stock is also low priced!

Source: http://www.gurufocus.com/

Dr. Charlie Tian, Director of Research of http://gurufocus.com, the website that tracks the stock picks of Warren Buffett, George Soros and other guru investors like Bill Nygren, Mason Hawkins, Ken Fisher, David Dreman, Martin Whitman, James Gipson, Robert Rodriguez, Ronald Muhlenkamp, Wallace Weitz, William, Ruane, Edward Lampert, Edward Owens, Richard Aster, Jr, Robert Olstein, John Keeley, Brian Rogers and Tweedy, Browne.

---

Choosing a Stock Broker

If you were to find that you had some severe... Read More

Trading Tips No 6: The High Cost of Low Cost Stock Market Information

It has been said that low cost or even free... Read More

Oil Stocks As A Long Term Investment

The demand for world oil is increasing while world reserves... Read More

Understanding Stock Market Indexes

A stock market index is a statistical measure of changes... Read More

What To Buy Now

I am sure that if you have a brokerage account... Read More

What To Buy?

Now that you have some money burning a hole in... Read More

Where Is The Rabbit?

We need a rabbit!This was a pretty horrible week for... Read More

More Window Dressing

Two weeks ago I wrote about what the Securities and... Read More

Being Wrong Buying Stock is Okay

Being wrong is OK, but let's not carry it to... Read More

When?

When will the stock market stop going down and start... Read More

Inertia Syndrome

When it comes to buying a stock or mutual fund... Read More

Quality Investment Information: Standing Firm In the Face of Opposition

THERE'S SOMETHING TO BE SAID FOR standing firm in the... Read More

Invest, Be Wrong, and Make Money in the Stock Market

I have been trading for several decades and was an... Read More

My Neighbor Got A New Car

I don't know what kind it is, but I saw... Read More

Prospering with Mutual Funds: How Anyone can ?Afford? an Investment Advisor

Recently I was invited to appear on a live CNNfn... Read More

What is a Trading Plan ? and Why You Need One?

How do you make money without picking tops and bottoms?I... Read More

Trade Stocks for Real

I read a comment by a forum member on another... Read More

Trading For A Living

How many times have you said to yourself, "I'd like... Read More

I Love You, Warren Buffet

Sometime around 1980, can't remember exactly, there was a flight... Read More

Dont Buy Stocks based on P/E Ratio alone

I use the P/E ratio as a secondary indicator for... Read More

Option Trading Basics

Options trading can increase the profits you make when trading... Read More

Understanding a Stocks PEG Ratio

A PEG ratio cannot be used alone but is a... Read More

Dividend Reinvestment Plans: Investing on Automatic Pilot

If you're like many investors who squander those small dividend... Read More

Wall Street Paradigm

In 1960 an engineer working for a watch company in... Read More

Hedge Funds: the Good, the Bad, and the Ugly

Alfred Winslow Jones started hedge funds in 1949. He was... Read More

Attitude Is [Almost] Everything

I often play a little game with myself when I... Read More

Analyzing Growth Stocks: An Important Focus For Any Investor

Analyzing growth stocks is an important focus for any investor.... Read More

Trend Trading - Trading Stocks Using Technical Analysis and Swing Trading Strategies

Peter is a professional trader, Paul is not. Peter has... Read More

Online Broker Trade History Not Doing the Job

Let me start by saying that...Most online brokers do not... Read More

Frog In The Pot

You remember the story about the frog that was put... Read More

The Secret Method to Selecting a Winning Trading System

Every successful trader has a winning system. There are of... Read More

Hold Em and Fold Em

When most analysts, financial planners, fund specialists and investors try... Read More

Gurgle Gurgle

Caught in a whirlpool and being sucked under. No life... Read More