Last week, Wal-Mart (WMT 0.56%) 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 (AMX 0.34%) 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 (GDOT +0.00%), 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 (COST 0.68%), Starbucks (SBUX 0.61%), and Whole Foods Market (WFM +0.00%) 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 (TGT 1.49%). 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.
