Walmart Inc (WMT)

Caller asked what to Short. He has a number of shorts. Wal-Mart because of weak numbers and free cash flow below earnings due to depreciation.

A consumer staples name that has really pulled back and this is a pretty interesting entry point. Very dominant name. 100 million people walk into a store every single week. Doing well in almost every market that they are in.

Does not like it. A lot of leverage to the low end consumer. There are any number of data point about unequal recovery from the recession for consumers. The growth drivers are not there.

It is looking doggy. It is in a trading range when the market is going to new highs. Seasonally this one doesn’t do well in the summer. Trend is no longer on the upside and not outperforming market so good time to take profits. Best time to buy is just before Christmas.

A wonderful company. This is one you could buy and still be happy. They are wonderful at buying back stock. They generate so much free cash flow. Hard to imagine how much revenue growth you are going to get going forward.

Likes this a lot. You are getting very consistent growth. You’re paying 14-15 times earnings and it is going to grow at 10% so you are paying 1.5X peg ratio. Also, they are going into emerging markets and taking advantage of the consumer getting wealthier.

Terrific company but he prefers to play US retail through Staples (SPLS-Q) which benefits from the US improving employment situation or, Bed Bath and Beyond (BBBY-Q) which gives exposure to the US housing market. This one is not cheap enough to buy.

World’s largest retailer. Trades at about 13.5X forward earnings. Does a good job of generating excellent cash and does a good job of growing their dividends and this is what investors should be looking at. Expects dividend growth of 7%-8% per year. Yield of 2.5%.

Has done relatively well along with consumer discretionary stocks. When going into consumer stocks, particularly outside of Canada, she wants to see more of an international presence. This company has some but is still mainly North American based.

Trimmed some of his position just after they reported. This company has had a very nice lift because of the consistency of growth. They fall into the category of a safer stock. If you can get it closer to the lower $70’s it would be better.

Loves WalMart. Grow at 10% growth in terms of earnings on a long term basis. Their growth in international and they will continue to expand that.

Retailers have done quite well in the US because of improving consumer spending. This is a highly competitive space. Good long-term name, but they are all getting a little pricey. Wait for a pullback.

Although classified as in the retail sector, it is more of a staple rather than a discretionary. Chart shows an upward trend line from late 2011 with a little bit of support at around $77. If you own, watch for it breaking through the $72-$73 level. If it breaks through that and start to underperform the market, that’s when you need to exit your position.

This is a great snapshot of what is going on with the US consumer. Has been a great stock for the last couple of years but more recently has shown some signs of weakness. He sees longer-term threats from Amazon. Wal-Mart is responding with things like growing a number of stores but shrinking the number of employees. This is starting to impact the service.

This is a stock that could probably go on forever and based on a good valuation, one that you could buy and hold. The time to buy it was when there were the headlines of the Mexican bribery scandal. At the current price, its okay, not expensive at 14X earnings, growing dividends and buying back shares but he is finding better ideas in this space.