Walmart Inc (WMT)

Part of the consumer staples space, and has started to re-bounce since its October lows. They are dealing with higher wages, a stronger US$ and their e-commerce costs. Having some challenges, which you can tell because of the closing of some of their Express stores in the US. Long-term growth metric is probably low single digits of 3% or so. Pays a nice 3% dividend. Trading at 16X earnings. A bit expensive and there are other staples names he would prefer. Also, the stock has moved up against the 200 day moving average, so it might be getting a bit of resistance here. Would probably Sell and switch to another more attractive consumer staple name.

(A Top Pick Dec 22/15. Up 6.81%.) This was a fixer-upper, so the volatility of the market doesn’t scare him on names that have already been battered. Still thinks this is oversold and is weathering bad news.

Somewhat defensive in that their consumer base tends to be lower income. They made the announcement that they were investing into the future with online initiatives, so with all the bad news out there, this had a bit of a rally. This is a tough space and she is not looking to get into that retail space.

A good example of a name that has been beaten up, which he thinks has done something really interesting. Thinks this is going to get to $79 from cost savings through 269 stores being shut and them focusing on their express, groceries and pharmacies.

(Top Pick Jan 8/15, Down 25.77%) They are in a fight with Amazon in on-line sales. They have a new CEO who is trying to turn everything around. $75 model price, 13% above. This is a classic value name.

Always looking at this, but can only own 25-30 stocks, and this is never going to be his “best idea”. If you own, he would probably buy more as it is extremely well-run. Had meaningful pullbacks in the past few years, mostly due to execution issues. The last few quarters have not been good, and they have given guidance that this year is going to be a transition year. A long-term investor is going to compound their capital owning this company. They continue to buy back shares and continue to increase dividends.

Chart shows a long downtrend with a V stop giving some support. This has been beaten up because of the US$. They are executing in China, Brazil and the UK, and the UK really hurt them. This is a value play.

Right now there is a really interesting bifurcation of the market into 1) the value and convenience such as the dollar stores, Costco, etc and 2) the niche brand specifics. This company is in between and getting stretched by both sides, and having a really hard time. Also took their minimum wage up to $9 and up to $10 next year. Earnings revisions have been down and the stock has been down, and he thinks there are other places to be.

Doesn’t have the confirmation of volume to warrant the large drop in 2015. This did so well for so long, and the big drop with no volume indicates it has been completely oversold.

They have been the victim of their business mix. 50% of their margin comes from groceries. He would stand aside. It has not been the great American success story for the last couple of years.

It is pretty tough in the consumer space right now. It is very competitive and there seems to be a preference for buying hard goods versus apparel type of goods. Earnings growth is slowing. This company is large, so it is harder to grow when you are coming from a large base. Last quarter they announced they were making a lot of future investments for future growth.

This has not been growing and it is too big to grow. That is one of its problems. We haven’t seen any follow-through from clients in the store, because they are not driving to the store. The company’s Internet strategy is weak compared to others. This could be a failed retail story.

If you have a long term horizon then it is okay to get in now. They are unrivaled and continue to do well. They are so spread out that they are now having trouble growing their business. This turn-around will take 2-5 years.

This company is not going to be growing their revenues for the next couple of years because of some issues such as a lot of CapX that they had to spend and rising wage costs. Revenue has not been a solid as you would think. With their large store format, they are not getting as much efficiencies, and same-store sales have not done as well. They are getting a lot of competition from e-commerce.

(Top Pick Nov 25/14, Down 31.08%) He still has HD-N, but along the way it became clear that secular growth was the most attractive in this market. Part way through the year he rotated to AMZN-Q.