Monday, July 12, 2010


The stock for this month is Walmart - WMT, at Friday's closing price of $49.42 is a good buy. It has low downside potential and reasonably good upside in many different macroeconomic scenarios. The discounted cash flow valuation is a lot higher between $75-80 but for the market to give such a multiple to WMT, it'll need to assure the street of a long term sustainable growth from international markets pushing up the overall eps growth to the 12-15% range. However, WMT can easily hit $57-60 range even with lower growth while the downside from $49.42 is quite low.

Please check my earlier post from Oct 2009 for slides on WMT.