Professor Elam

Seems like everyone is after WMT, from Barack and the Unions  towns in New England.  Alas, the generals always fight the last war, perhaps WMT’s detractors should spend more time looking at financial statements and less time looking back. Seems same store sales are up a tiny 1.5% year over year, yep, WMT has become its own biggest competitor robbing sales of other stores. This is not the case for Target as you will read on page B3 of the Wed Nov 16 WSJ.  When everyone gets really worried and the worry takes the front page of the conventional as opposed to financial press, you can usually bet that the real threat has already passed.  Tom Sowell observed in a past column that the A & P food market chain once dominated America, but where is it today, suggesting that this same fate could befall WMT.  I am not predicting the imminent demise of WMT but I am suggesting that the era of growth is over and that WMT is now a mature company, like MSFT, making money but growing the stock no longer.

At left I have constructed a ratio chart.  This plots the price of Target TGT versus Walmart WMT.  If the weekly bars are going up it means that TGT stock is consistently outperforming WMT.  Click to see what has been happening.  As you can see TGT has outperformed WMT for several YEARS now. So what is everyone worried about?  Once again, if WMT detractors understood accounting and technical analysis of stock prices, they need not have been so worried that WMT would continue to dominate the landscape.  Yes they do, but others are catching up fast.

DLE