Have you ever seen an empty parking lot at Wal-Mart Stores, Inc. (NYSE:WMT)? If you have never been to Wal-Mart, then there’s at least a good chance that you have driven by one. And if that’s the case, then it’s likely that you told yourself not to drive by it anymore if possible. Why? Because the store creates too much traffic. When a store creates “too much traffic,” you should be betting with it, not against it.
Some analysts have recently come out and said that they’re bearish on Wal-Mart Stores, Inc. (NYSE:WMT). One analyst even mentioned shorting Wal-Mart Stores, Inc. (NYSE:WMT) — not recommended in any way, shape, or form. Of course, there will always be short-term fluctuations, but Wal-Mart Stores, Inc. (NYSE:WMT) has done nothing but reward its investors for decades. This includes recessions. As a matter of fact, Wal-Mart Stores, Inc. (NYSE:WMT)’s stock actually appreciated in 2008. This was a rarity, especially for a retailer. This happened because middle-income consumers added to the traffic. They needed to cut costs and shop for value. Wal-Mart fit the bill. Many of those middle-income consumers still shop there today.
Wal-Mart might not be growing at a rapid rate, but it’s still growing, and that’s more than can be said for many companies throughout the broader market. Several other factors make Wal-Mart appealing.
Wal-Mart might have a reputation for treating its employees poorly, and rightfully so, but management has a different kind of focus.
Wal-Mart is all about keeping investors happy, and if you’re one of those investors, then you don’t want Wal-Mart employees to have higher wages or improved benefits. You want costs to stay low. This sounds terrible from a moral standpoint, but the purpose of this article is to educate from an investing standpoint, not a moral standpoint.
Another plus for investors is that Wal-Mart employs approximately 2.2 million people. This might not seem like a plus, but if Wal-Mart wanted to cut a portion of its workforce to cut costs and boost earnings, it could do so with ease. Wal-Mart could start with the unnecessary greeter.
Ahead of the curve
Wal-Mart wants to be ahead of industry trends. While Wal-Mart might not have a reputation as a strong online company, it’s ranked No. 34 in the United States and No. 172 globally for online traffic. Unlike most retailer websites in this weak consumer environment, Wal-Mart’s online traffic has increased over the past three months. Online traffic has also been steady for Sam’s Club.