Wal-Mart Stores, Inc. (WMT), Macy’s, Inc. (M), Target Corporation (TGT): Will These Stocks Perform in the Long Run?

Page 2 of 2

Wal-Mart Stores, Inc. (NYSE:WMT), for instance, has, for the first time, offered free layaway with zero opening fee. The offer, starting from Sept. 13 for three months, will include a wider range of products as compared to previous years. Last year, when there was $5 layaway fee, sales got a 10% boost. This year, the boost should be higher, given the more attractive offer. The boost, however, will be temporary.

Macy’s, Inc. (NYSE:M) management sounds optimistic about its back-to-school sales in August, which is apparently turning out to be better than the year before. Keeping in mind the price sensitivity of the middle class customer, the company has plans to tweak its marketing strategies to create greater demand for its products in the next two quarters. However, the company has revised its outlook for the full year downwards, assuming little improvement in consumer demand.

As for Target Corporation (NYSE:TGT), price matching policies, REDcard Rewards, Pharmacy Rewards and higher discounts are on its agenda for the year ahead. The company also plans to improve its mobile app Cartwheel to drive sales further.

Will they work?

Despite continued efforts to boost sales, the future looks pretty dull for these retailers. In a recovering economic scenario such as now, little can be done to improve bottom and top line numbers. Until wages see a significant hike over and above the inflation rate, consumer spending will remain at low levels. In the next few months, this looks unlikely. At the moment, it’s best if investors keep away from these stocks.

In the long run, however, these stocks have potential. Macy’s, Inc. (NYSE:M) projects a healthy business structure with high potential for growth. At a relatively low P/E of 13.10, it can prove to be a good long term investment, once the recent slowdown in demand is overcome. Wal-Mart Stores, Inc. (NYSE:WMT) also has bright prospects in the long run. The ever-expanding company has a policy of purchasing shares, and has a decent dividend yield of 1.88%. Target Corporation (NYSE:TGT), the second largest retailer in the country, is known for its consistent earnings growth and handled the recession relatively well. Economies of scale and resilience are what make this company tick in the long run.

The article Will These Stocks Perform in the Long Run? originally appeared on Fool.com is written by Sonam Chamaria.

Sonam Chamaria has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Page 2 of 2