Wal-Mart Investing Lessons From McDonald’s Stock

A quick word on Wal-Mart stock. Did you see the recent news that Wal-Mart plans to close down 269 stores? It is a mostly a non-event that affects about 0.5% of Wal-Mart’s revenues, as 256 of the 269 underperforming stores being closed are those that are located within 10.5 miles of another Wal-Mart. Given that earnings at Wal-Mart in 2016 and possibly 2017 are expected to be lower than Wal-Mart’s 2014 reported earnings estimates, you may fairly wonder: Why do I consider Wal-Mart a good purchase in the low $60s, rather than advocate waiting until the earnings show signs of a turnaround?

Isn’t there an opportunity cost associated with holding a company whose earnings aren’t growing? Yes, there is an opportunity cost of waiting for ideas to come to fruition, but what must be remembered is this: The opportunity cost of waiting for earnings to improve, however, is not the … Read the rest of this article!