Friday, July 13, 2012

"Warren Buffett Wins as Berkshire and Walmart Rally" (WMT; BRK.B)

Wal*Mart has run approx. 22% since the week of May 9-16 and may be getting tired.
We've been on-board for about half that ride, since I realized "Saaay, this thing looks ready to test its Dec. 31, 1999 all-time high and break out of a twelve year base".

It is quite possible that WMT could move ten-fold over the next ten years, I'm not kidding although right now I have no idea what corporate developments would propel it to a 2.4 Trillion market cap.

After you stop laughing make a mental stop at the old all-time high, $70.25, watch the relative strength versus the DJIA (of which it is a component) and decide if, should the financial world blow up in 2013, you are in it for a decade or for a trade.
$72.56 last, up 25 cents (.36%) with the Dow Jones up .97%.
From GuruFocus:
For the decade from 2002 to the end of 2011, Walmart Stores Inc. (WMT) shares went virtually nowhere, remaining in the upper $50 range. In fact, a year ago FPA Capital Adviser’s Steven Romick called the company an “infinite duration bond with a rising coupon.” Recently, investors have jumped on the Walmart bandwagon and the stock increased 21% year to date, approaching fair value and making Warren Buffett richer.

Buffett increased his holding of Walmart by 17,892,342 shares in the third quarter of 2009 at an average price of $50, and again by 1,200,500 shares in the fourth quarter at an average price of $52.50. He then brilliantly bought 7,671,000 shares at an average price of $61 in the first quarter of 2012, just before the stock surged more than $10 to $72.31 at latest quote.

At the new price, Walmart is approaching fair value. While its stock price remained flat for a decade, Walmart’s EBITDA grew at 11.3%, and it had record earnings per share of $4.54 in fiscal 2012. In 2003, Walmart’s P/E was as high as 33. When Buffett bought more in the first quarter, the P/E was around 13, near its 10-year low. The P/E has since risen to 15.5....MORE