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WMT Growth & Income Trade Idea

WMT (Wal-Mart Stores Inc.) will be added as an Active Growth & Income Trade at the open today. Since WMT peaked back in January of this year, the stock has plunged 37% to a well-defined long-term support level while at rarely seen oversold levels which have historically preceded major uptrends in the stock.

 

With a current dividend yield of 3.42% and the potential for about 21% in capital appreciation, should the stock advance to the final target, T3 on the daily chart (somewhat above 70, the exact suggested sell limit levels will follow) and a suggested stop on a weekly close below 56.00, Wal-Mart offers a very attractive R/R for longer-term traders or investors, especially those looking for above average income along with the potential for capital appreciation.

As with all Trade Idea categories, a full description of the Growth & Income Trade Ideas can be found towards the top of the page when viewing the Growth & Income Trade sub-category located under Trade Ideas on the main menu.

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5 Comments

  1. Compression Point November 4, 2015 10:22 am at 10:22 am

    What’s your guess at a timeline for hitting T2? I don’t want to tie up a lot of capital, so I was thinking about buying options. Thanks.

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  2. rsotc November 4, 2015 10:38 am at 10:38 am

    My best guesstimate, which would assume that the US markets hold up & do not take another major leg down, would be that T1 could be hit anywhere from early to late December, followed by a reaction (i.e.- pullback and/or consolidation) which might take a few weeks to a couple of months. If the charts were still constructive at that time, WMT could then break above that downtrend line in, say Jan or Feb, & then move up to the T2 level (second target around 67) sometime in Feb or March. Again, lots of “IF’s. Remember, it is one thing to be so specific with calling where a stock is headed price-wise but it is a whole other animal to try to call WHEN it will get to those targets but based on the look of the chart (and again, barring another major leg down in the markets), that would be my best guess. G-luck if you take it.

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  3. rsotc November 4, 2015 2:37 pm at 2:37 pm

    FYI….I had meant to add to the original post that WMT is scheduled to report earnings before the market opens on Nov 17th (just under 2 weeks from now).

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  4. Beno November 4, 2015 11:58 pm at 11:58 pm

    I read an article on WMT that if true gives a different perspective on it going forward. i will just paste the meat of it here for you to consider.

    Wal-Mart hasn’t been a growth story in years. You have to go all the way back to fiscal 2008 to find the last time that sales grew by more than 6%, and it hasn’t been able to break north of 2% top-line growth in three years. Meandering sales growth would be fine if margins were expanding, but net margins are actually contracting. Wal-Mart sees flat sales this fiscal year and a sharp decline in profitability, and it’s going to get worse before it possibly gets better.

    Shares of Wal-Mart suffered their biggest single-day drop in a decade last month after the discounter painted a bleak portrait of its near-term prospects. It sees sales growth of no more than 3% to 4% through the next few years, and it sees earnings taking another hit next year as it absorbs its latest hike to its starting wage

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    • rsotc November 5, 2015 8:03 am at 8:03 am

      Thanks for sharing that Beno. I welcome & encourage other viewpoints to a trade. Although I often incorporate fundamentals such as that into the Long-term Trade ideas (of which the Growth & Incomes Trades is a sub-category of), this trade is primary based off of the technicals (charts). One thing to take into consideration is the fact that WMT has already plunged over 37% since it peaked less than 11 months ago. As the market typically looks out 6-9 months ahead, the big question is how much of what was discussed in that article has already been priced in? Again, thanks for sharing.

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