Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Wal-Mart Stores, Inc. (WMT), Target Corporation (TGT), Costco Wholesale Corporation (COST): A Value Play, A Growth Play, And A Dud!

Wal-Mart Stores, Inc. (NYSE:WMT)Grocery stores and retail chains usually generate consistent cash flows due to their convenience and utility factor. But this stability makes it difficult for retail chains to report double-digit growth without inorganic expansions. However, there are a few retail chains that have growth catalysts lined up to power pack a rally for 2013.

A value play

Shares of Wal-Mart Stores, Inc. (NYSE:WMT) have been under pressure lately because of its earnings miss in the recent quarter. The retailer mainly caters to the poor and middle class population, which has been financially crunched due to rising gasoline and natural gas prices. Management confirmed that the coming quarters could be stressed if its clientele continuously bears inflationary pressures.

But, with the oversupply of crude, its prices have plunged to below $100, which has relaxed travelling expenses by up to 10%. Although crude prices may head north over the longer run, analysts estimate that its oversupply could drag Brent crude prices down to around $95 over the short term.

Furthermore, the pending minimum wage bill, which demands a 37% hike in minimum wages, could further relax the middle and poor-class population. Since the U.S. economy is showing signs of recovery, on the back of higher consumer spending, it’s highly unlikely that the minimum wage bill would be knocked off the table.

Altogether, these factors would increase the disposable income of the average Wal-Mart Stores, Inc. (NYSE:WMT) customers, which would eventually begin to show up in its financials. In my opinion, the positive effects of lower oil prices could be seen almost immediately in the coming quarters.

A growth play

Even Target Corporation (NYSE:TGT) seems well-poised for an upside. The store chain operates with over 1,700 stores, mainly spread in the U.S. and Canada. Its management announced that it would be remodeling 100 of its existing stores this year to improve the shopping experience and allow efficient product placement. Furthermore, Target Corporation (NYSE:TGT) would be investing $2.3 billion to open around 124 new stores in the U.S., which would eventually boost net sales by up to 8%.

Besides that, the company is also reporting record mobile traffic. For the recent quarter, mobile purchases accounted for 7% of total sales, while mobile traffic accounted for around 25% of overall digital traffic. It’s a well-known fact that mobile payment solutions are catching up fast, due to their timely and convenient mode of transactions. But, that’s not all. As its mobile payment solutions gain greater acceptance, Target Corporation (NYSE:TGT) would be able to indulge in direct advertising, at virtually no cost.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.