Breakout

Target, Wal-Mart: Buffett Believes in the Consumer, You Should Too Says Altucher

Target (TGT) nailed a trifecta with surprisingly strong first-quarter earnings results released this morning. The big box retailer reported EPS of $1.11 a share (ex-items) versus the $1.04 consensus estimate. Revenues came in at $16.87 billion versus $16.85 billion estimated. And the company raised full-year 2012 guidance by 5 cents to $4.60 to $4.80.

"They hit the bullseye on these earnings," says James Altucher, managing director at Formula Capital. "'They're hitting the low-end and the high-end (consumer) at the same time."

Altucher says Target is reigning in buyers of all sorts by offering widespread discounts, exclusive products, and implementing a clever way to compete with online retail dominated by Amazon (AMZN).

"Companies are making products specifically for Target so you can't go on and buy them online," he explains. "So Target is effectively having an online strategy by targeting off-line."

Altucher sees any company tied to the economy as a benefactor of underlying improvements, namely Wal-Mart (WMT).

Our nation's largest retailer reports results Thursday morning before the opening bell and analysts are expecting single-digit growth in their year-over-year numbers with EPS of $1.04 and revenue of $110.5 billion.

Despite reporting a drop in profit in its two prior quarters and a mountain of bad publicity from allegations of bribery in Mexico, Altucher sees a huge flashing buy signal after word that Warren Buffett significantly upped his stake last quarter. Quarterly 13-F filings show Buffett's Berkshire Hathaway (BRK-A)(BRK-B) bought nearly 8 million shares of WMT during the first quarter, increasing the overall holdings to 46.7 million shares.

"Warren Buffett's a believer in the consumer in this economy, and the consumer shops at Walmart," Altucher says. "Walmart is the consumer economy, they're the retail economy…People left JC Penney (JCP), they had to shop somewhere, so they're shopping at Walmart and Target."

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