A Fool Looks Back

Downloads and down low were fit to be featured this past week. Let's take a closer look.

As good as it gets for Sam Walton
When Wal-Mart (NYSE:WMT) reported its quarterly earnings this week, the results weren't all that surprising. Earnings rose 13% as sales came in 9% higher. That's Wal-Mart for you. It's a well-oiled machine of consistency, but that's doesn't stop it from being a hodgepodge of paradoxes. Steady yet powerful. Boring yet controversial. Cheap yet costly.

Something pretty neat has happened over the years. The stock has gone nowhere for five years, yet the earnings continue to inch higher. It's not usually by much. Here in 2006, the company is looking to grow earnings by no more than 10%. Yet as the stock has marched in place (and it's actually trading a few bucks lower than where it was five years ago), the value proposition has improved.

Sure, investors were nuts for paying 30-35 times earnings for Wal-Mart as the millennium turned. Wal-Mart wasn't growing that quickly at the time. This is Wal-Mart that we're talking about, folks. Yet now that the stock can be had for 17 times trailing earnings and less than 16 times forward profitability, maybe it's time to give the company that Sam Walton built another look.

The company doesn't plan on being boring forever. The company is attempting to ape Target (NYSE:TGT) by going cheap chic. It's a move that may backfire; fellow Fool Stephen Simpson has pointed out that pursuing fickle fashion tastes may gum up its otherwise perfect inventory turnover machine. But the facts remain that no one is ever going to be able to source product for less than Wal-Mart, given its economies of scale, so long as the company keeps its markups honest. No one will sell for less than Wal-Mart, either. I think shoppers will be willing to forgive bad fashion bets along the way, because Wal-Mart has been flavor-agnostic in the past. In other words, it has counted on its shoppers being willing to live with clothing basics and unsophisticated fashion tastes. Even an outlandish foray may be simply gobbled up as the new standard in basic apparel.

Yes, I think Wal-Mart can dictate fashion trends through its sheer volume. It's why I'm finally starting to look at the stock. That's something that I never thought I would hear myself say back in the1990s, when the shares seemed just too pricey for a discount department store chain that traded personality for performance.

Be a musical billionaire
Eight coworkers at a meatpacking plant may have struck it rich in the lottery this week, but Apple Computer (NASDAQ:AAPL) truly landed the cool billion. The iPod giant finally logged its billionth digital download. We all knew it was coming. Shortly after the company lapped the 950 million mark, it began an active counter on its iTunes landing page that raced toward the milestone.

Yes, Apple is bestowing the lucky downloading patron with some cool prizes. We're talking a snazzy Mac, a few iPods, and a ton of money to spend at the iTunes store for winner Alex Ostrovsky. It's a fair trade, though, because we all know now that Alex is a fan of Coldplay.

Just kidding there, Coldplay fans. X&Y is a great album and "Fix You" is a masterpiece. I'm thinking this was all rigged, though. What did the lead singer of Coldplay name his daughter?

"Apple."

I smell a conspiracy.

Until next week, I remain,

Rick Munarriz

Longtime Fool contributor Rick Munarriz loves to look back, even if it means he falls on his face going forward. He does not own shares in any of the companies in this story. The Foo l has a disclosure policy. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.