Being Long on Wal-Mart Is Wrong
A downgrade by Jeffries to Hold from Buy put Wal-Mart (WMT) shares in the market's spotlight today. I won't dive too deep into my views on the Wall Street ratings system (briefly, I would say that type of downgrade means to sell the stock and seek more promising opportunities elsewhere, not hold a stock that is akin to dead money). If you are inclined to visit the Bloomberg or Thomson Reuters consensus rundown, it will show that I have been the lone analyst on Wall Street carrying a Sell rating on the stock -- since Dec. 17, 2010. My reasons for this may be help you -- the investor who is being told to hold a stock that yesterday was rated a Buy -- to fully appreciate what is happening at the company and why I am saying to avoid shares in the world's largest retailer.
For a retail giant that is basically everywhere in the U.S. and is making strong inroads into the international scene, Wal-Mart's stock price has been anything but fresh and easy for an investor's portfolio. Since peaking at a 52-week high on Jan. 28, Wal-Mart stock has fallen 8.3% compared to the S&P 500, notching a modest loss. Keep in mind this is despite a massive $15 billion share repurchase program looming over the earnings line like a thundershower on a 105-degree day....302 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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