Wal-Mart Stores, Inc. (WMT) Is For The Long-Term Investor

What is Ahead for Wal-Mart?

While sales and growth have been flat for Wal-Mart Stores, Inc. (NYSE:WMT), its management team is experimenting and shaking things up. That gives me hope for the future of the company and for the future of its stock price. I think that its investment in E-commerce will eventually pay dividends, financially and strategically. As a result of the company’s massive national footprint, it should be able to effectively deliver goods to almost every corner of the country. In 2015, it is predicted that the company will gross $13 billion in revenue from its E-commerce business, a healthy 30% increase from 2014.

Another experiment that is working for Wal-Mart is the introduction of small neighborhood stores as opposed to large supercenters. The small neighborhood stores attract grocery shoppers in a way that supercenters fail to. Same store comps were up 1.5% at supercenters but up 7.3% at the smaller neighborhood stores. The company announced that it would open up 270 to 300 small format stores during 2015, but eventually had to settle for only 235. In 2016, the company will open an additional 160 to 170 of the smaller format stores.

With the innovations that Wal-Mart is making, I would not write it off as an investment idea. The company has a PE of 13.3, which means that it trades at a discount to competitors such as Dollar Tree (22.2), Dollar General (21), and Kroger (19). Also, it is still solidly profitable, and it pays a dividend of $1.96 with a yield of 2.9%. I do not expect that Wal-Mart’s stock will move much higher in the near future, but for the long term investor – now might be the time to start buying shares of the stock on price dips.

Disclosure: The author of the article has no position in WMT or the other securities mentioned.