Why I Won't Touch Wal-Mart

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Last week, Wal-Mart (NYSE: WMT  ) shares lumbered up to a new 52-week high; apparently the discount giant's pretty popular with investors right now. However, popularity doesn't make a good investment for the long term.

Granted, Wal-Mart's got friends in high places. American Express (NYSE: AMX  ) has recently made a deal to offer its Bluebird service through the giant discounter. That way American Express can target Wal-Mart's low-income customers seeking an alternative to traditional banking and its fee-heavy structure.

Bluebird allows users to load cash onto pre-paid cards through options such as direct deposit, traditional bank accounts, and even at Wal-Mart registers. A key point is that the Bluebird service won't include overdraft charges, minimum balance rules, annual charges, or activation fees.

Wal-Mart also offers similar services through Green Dot (NYSE: GDOT  ) , but obviously, exclusivity wasn't part of the deal.

Wal-Mart's been getting growth back on track lately, but the current macroeconomic climate continues to be a dangerous, uncertain one. Meanwhile, some of the financial products it offers may help its low-income consumers who are far too squeezed by fees, but on the other hand, many of its own employees reside within that struggling demographic, too.

Some Los Angeles-based Wal-Mart workers recently staged a strike, accusing the discount giant of cheap labor practices that critics have complained about for years. These include a reluctance to hire full-time employees and offering such low wages and minimal benefits that Wal-Mart workers are forced to turn to government programs for assistance.

Granted, retail isn't exactly renowned for great pay and perks, but some retailers have made it a priority to offer their employees much more than they're required to, competitively or otherwise. For example, Costco (Nasdaq: COST  ) , Starbucks (Nasdaq: SBUX  ) , and Whole Foods Market (Nasdaq: WFM  ) all offer some variation of worker-friendly policies such as higher-than-industry pay, health-care benefits, and stock and stock options to rank-and-file employees.

Wal-Mart's currently trading at 14 times forward earnings, which on the face of it, looks far cheaper than Costco and just a tad pricier than Target (NYSE: TGT  ) . I don't buy that Wal-Mart's shares are anything close to a deal, though. Between the poor economy and continued allegations that it's part of the problem, not the solution, given its own struggling workforce, Wal-Mart's future growth is still threatened on several fronts.

Alyce Lomax owns shares of Starbucks and Whole Foods Market. The Motley Fool owns shares of Costco Wholesale, Starbucks, and Whole Foods Market and has options on Starbucks. Motley Fool newsletter services recommend Costco Wholesale, Starbucks, and Whole Foods Market. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (1) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 10, 2012, at 3:43 PM, chopchop0 wrote:

    Sounds like the same person that probably wrote to sell WMT when the Mexican bribery scandal broke this spring


    Disclosure: Long WMT

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2048612, ~/Articles/ArticleHandler.aspx, 10/22/2016 7:53:08 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 22 hours ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:00 PM
AMX $12.03 Up +0.07 +0.59%
America Movil CAPS Rating: ****
COST $148.97 Down -1.07 -0.71%
Costco Wholesale CAPS Rating: ****
GDOT $22.81 Up +0.12 +0.53%
Green Dot Corporat… CAPS Rating: ****
SBUX $53.63 Up +0.04 +0.07%
Starbucks CAPS Rating: ****
TGT $68.23 Up +0.52 +0.77%
Target CAPS Rating: ***
WFM $28.08 Down -0.21 -0.74%
Whole Foods Market CAPS Rating: ****
WMT $68.34 Down -0.39 -0.57%
Wal-Mart Stores CAPS Rating: ***