Leo: Trailing p/e's are the most reliable thing to go by but in
a company like WMT that has such consistent earnings growth and is,
in fact, concurring that they will meet analysts' projections, the
forward-looking p/e is also pretty safe.
Some of your comparisons, I have to agree with Ken, are off the mark--
I don't know if Fingerhut and such are tongue-in-cheek like your
Service Merchandise remarks but they're not in the same league as
WMT. As a matter-of-fact, nothing is really in the same league with
WMT--the best comparisons might be Target and K-Mart but, there again,
they aren't up to WMT when it comes to buying power and efficiency and
just about any retail benchmark you can find.
Using big-ticket sales to compare WMT is also misleading since WMT will still be a leader in sales growth even in a slowing economy--WMT
sells mostly necessities along with very cheap stuff that consumers
always go for. If you want cheap junk at the cheapest prices, and
that's always been a stable retail sector, Wal-Mart's got the most
cheap junk at the cheapest prices of anybody in retailing.
On the other hand, our local business channel analyst says his technical analysis finds agreement with you that the market is
overbought--gasp--and he says retail is the 5th most overbough sector with WMT one of the most overbought stocks.
So there you have it--I agree with you and Ken too; the only thing
I say is that in this particular market, WMT isn't overly expensive;
it is, however, expensive enough that I wouldn't buy it or any other
stock at these prices--too rich for my blood. On the other hand, it
may be worth holding awhile longer, especially considering the net
after taxes and commissions. |
