October 6, 2014 Comments

Walmart is updated and rated (lower) Buy at $77.32 (That was Friday’s close it closed today at about the same price $77.35). It’s not an exciting investment and it is not very likely to deliver double digit returns over the next five to ten years. But it is likely relatively safe. A reasonable strategy might be to buy on dips.

We first added it to this site on April 20, 2006 rated Buy at $46.70. Since then it is up 65% (excluding dividends) which is a decent but not spectacular return.

It is currently in a period of flat earnings due to currency impacts and weak to moderately declining same store sales. If it can resume growth the share price would likely rise somewhat. If the share price were to decline to about $70 I might buy.

Even if we conclude Walmart is likely to be a decent investment I might still not Buy. There may simply be better opportunities.

On Monday the S&P 500 fell 0.2% and Toronto fell 0.3%

This evening the Canadian dollar is at 89.44 U.S. cents. A lower Canadian dollar means U.S. stocks gain when valued in Canadian dollars. However American investors holding Canadian stocks see a decline. Whether a stock is “Canadian” or America in this context is NOT determined by the exchange it trades on. It is determined by where it earns most of its money. A lower Canadian dollar is generally considered good for the Canadian economy. It will harm retailers such as Canadian Tire as their costs s of good sold will rise.

Recently I have judged the America market to be somewhat over valued. That is definitely NOT the same as predicting it will decline. I will follow Buffett’s view on that and admit that I cannot predict the direction of markets especially in the short term. Nevertheless I can react to the a higher market by being cautious in buying and by perhaps cutting back some positions.

However, another consideration is that an expensive market does not means that every stock in the market is expensive. If I like what I hold I can potentially even add to those particular positions even while suspecting that the overall market is somewhat high.

The Canadian “market” is harder to judge in part because it is too concentrated in a few sectors. And also because I have had difficulty getting reliable earnings figures for the Toronto index.

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