Wal-Mart Stores, Inc. (WMT), Target Among Billionaire Ray Dalio’s Retail Bets

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BRIDGEWATER ASSOCIATESBillionaire Ray Dalio founded Bridgewater Associates in 1973 from his apartment. After 28 years, Dalio stepped down as CEO and is now the co-CIO and “mentor”. One of the big feats for Bridgewater is that it manages only institutional money – around $120 billion. The other uniqueness of the firm is its culture, driven by utter transparency. After reviewing Bridgewater’s recent 13F filing – which reports publicly traded equity positions from the end of 3Q – we have taken notice of five retail stocks that the fund is invested in (check out Ray Dalio’s top bets).

Wal-Mart Stores, Inc. (NYSE:WMT) is expected to see revenues up 5.5% in FY2014, mainly on the back of 9% growth internationally. We like Wal-Mart given its international presence and diverse product base. The retail giant is also expected to see strong square footage growth of 3.5% and same store growth of 2% in FY2013. Driving Wal-Mart should be the benefit from increased demand in merchandise improvements in domestic stores and greater expansion in international markets. Low-priced products and robust discretionary item offerings make Wal-Mart one of the top retail investments. Warren Buffett is Wal-Mart’s top fund owner with over 46 million shares (see Warren Buffett’s new picks).

Target Corporation (NYSE:TGT) is looking for 2% same store sales growth in FY2014, which is being driven by solid customer visitation. Increased store traffic is related to store remodeling and new fresh food offerings. One of the big growth initiatives for Target is expansion efforts into Canada, with store openings slated for Spring 2013, which are expected to add 4% in sales growth. Target also made the sale of its credit card portfolio, which should help boost its 2.4% dividend yield. From a valuation standpoint, Target trades below its top peers at 13x earnings, compared to Wal-Mart (14x) and Dollar General (16x).

The TJX Companies, Inc. (NYSE:TJX) expects solid same store growth in FY2013 and FY2014, with costs expected to be cut $75 million in FY2013. One of the key drivers for TJX will be better than expected sales trends in Canada and Europe. T.J. Maxx has also been executing its conversion of A.J. Wright stores to T.J. Maxx and Marshalls, not to mention the planned opening of 150 net stores, and repurchasing of $1.3 billion in stock during FY2013. Billionaire Ken Griffin – found of Citadel Investment Group – was TJX’s top fund owner with over 3 million shares last quarter (check out Ken Griffin’s latest picks).

What other companies made the cut?

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