During the last decade, the stock market has experienced volatility not seen since the stock market crash of 1929 that led to the Great Depression. Wal-mart’s stock has offered extraordinary stability. Its stock has traded between about $45 and $65 since 2000. A savvy investor could purchase the shares once the stock dipped below $50 and sell the shares once they moved past the $60 mark. This would provide a 20 percent gain plus their two percent dividend and provides stability that few other stocks can offer.
Wal-mart generated $405 billion in revenue during their fiscal year ending January 31, 2009. This revenue created over $13 billion in net income for the same period. According to Forbes.com, Wal-mart is the third largest company in the world with regards to market capitalization and sales. According to WalmartStores.com, Wal-mart employs more than two million associates worldwide. This makes Wal-mart one of the largest private employers in the U.S., Mexico and Canada.
According to WalmartStores.com, Wal-mart operates 4200 stores in the U.S. Internationally, Wal-mart operates 3600 stores in 16 different markets. This global reach allows Wal-mart to have markets outside the U.S. to contribute to both their revenue and profitability. As well, Wal-mart has growth opportunities in the international arena as they only have exposure to 16 of these markets. Wal-mart will continue to push into new countries and expand their current markets, such as China.
Since Oct. 7, 2007, the S&P 500 was trading slightly above the 1500 level and Wal-mart was trading at about the $47 level. The S&P 500 dropped to lows at the 756 level while Wal-mart went down to $42.90 and then traded around the $50 level for the next year and a half. This shows much more stability than the overall market
When a company has the low-cost position in an industry, many times those businesses will become stronger during down turns in the economy. Wal-mart has seen an increase in total revenue of over eight percent and seven percent over the last two fiscal years, while most retailers have seen sharp decreases. Wal-mart has established a high barrier to entry as the low-cost provider. The technology required to manage their inventory systems involves extensive technology investment and know-how.
While Wal-mart has received some bad publicity regarding the company’s success, examine a few strengths that Wal-mart offers their employees. Out of their two million associates, 94.5 percent have reported having some form of health care. Both the full-time and part-time associates can become eligible for health benefits. In 2009, Wal-mart awarded roughly $2 billion in financial incentives to hourly associates.