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American Capital Agency Corp. Message Board

  • walrus8 walrus8 Apr 18, 2013 9:59 AM Flag

    OT - WalMart

    This has been a great long term buy and hold, given it's history of stock splits.

    The last time it reached a pps of $92, it split 2 for 1 and it's now trading @ approx $79, just off of it's 52-week high with a 2.4% divvy.

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    • Unless you bought Wal-Mart before 1999 or in the last year you lost money once inflation in taken into account. WMT's dividend yield wasn't that high 10 years ago so it would not have defended it against inflation.

      With that in mind I don't under how it can be classified as a great long term buy and hold investment when it has been almost flat for 14 years. Also its current PEG of 1.6 says that it is overvalued meaning that this latest run up is not justified on a growth stock valuation basis. Granted, the PEG would be somewhat lower if the dividend yield was added to the growth before calculating it which is probably a fairer metric. However, no one ever made money consistently when buying stocks whose PEGs are greater than one unless you are a nimble story stock investor who effectively dodges train wrecks but then that is not LTBH investing which is the topic of this discussion.

      Obviously if you bought 1000 shares of WMT in 1972 you would be a wealthy man but then you would have done much better had you sold it in 1999 and invested in other things since then.

      Also keep this in mind. Wal-Mart has based most of its success on its ability to get products dirt cheap from China at the expense of US jobs. But that model is now starting to break. As a result many of their competitors are doing as well if not better than Wal-Mart. Wal-Mart sells low price stuff and as bunker fuel cost go up it becomes more expensive to ship products from half way around the globe. So their China model is starting to show cracks.

      But in all honesty I am not unbiased on Wal-Mart. For the most part I won’t shop there because I think they are one of the major US retailers who have sold out the US. Not that I blame them for doing it as the consumer has demanded that they do what they do but I’m not going to participate in my own demise. Also they don't have Green and Blacks Chocloate any more, except on the web, so they have nothing I want anymore.

    • walrus i generally sell of 52 week highs. By the way how much does a stock split pay? OK there is usually a little bump until people realize they end up with nothing extra.

 
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