How often do you run across an article that starts out by saying "Yay Wal-Mart
For one thing, the company appears to be embracing more environmentally friendly policies. I read a rather exciting article in Fast Company a while ago, focusing on how the company is becoming a major distributor of compact fluorescent lights (CFLs), which use much less energy. (It's not easy to make an article about light bulbs exciting, but this one succeeded.) Read Jack Uldrich's take on "Wal-Mart's Bright Idea" if you're interested.
Meanwhile, over on our Living Below Your Means (LBYM) discussion board, I spied a "Yay Wal-Mart!" post and looked into it. There ARRazorback reported: "I got my first $4 bottle of my monthly prescription yesterday at Wal-Mart. And I would like to say 'Yay Wal-Mart.' My prescription cost me in excess of $400 a year and now will just cost $48 a year. Very helpful for those of us without health insurance." (We covered the company's plan to offer $4 prescriptions in September.)
TVKFool chimed in, saying, "I have health insurance that doesn't pay for my drugs until the high deductible is met. Too bad the $4 drugs are not very extensive just yet. I look forward to the day where lots of generics are $4... or even $10 or $20."
ProfessorWB asked, "How can they afford to do that? Who is paying for the drugs if not the consumers, etc.?" And ARRazorback replied, "I believe they are using their corporate 'heft' to get the prices that low."
Right here is a fascinating place to stop. One thing that the company has long been accused of is using that corporate heft to strong-arm suppliers into selling goods to them extremely inexpensively. The downside is that supplier profit margins get squeezed severely, possibly threatening the welfare of employees and investors. The upside is that Wal-Mart customers get low, low prices. It might be easy to argue that Americans can afford to pay a few cents more for a pack of socks, but when it comes to prescription medicines, which can cost hundreds or thousands of dollars per year, using that corporate heft suddenly seems much more benevolent, doesn't it?
But let's return to the discussion. Ziggy29 opined that in addition to using its heft, the company may also be using its "ability to absorb the 'loss leaders' in order to help eliminate more competition."
Kwheless pointed out another interesting detail: "They are also saving money because they don't have to deal with insurance paperwork -- the cost is $4 for everyone, not $10 for someone from insurance plan X and $25 for someone from insurance plan Y, etc."
The debate intensified a little, with Diablo2Queen suggesting that, "when every other pharmacy in a 20 mile radius of Smalltownsville is out of business, they'll jack up the price."
Read the whole discussion, if you'd like. And also check out some of these articles on Wal-Mart:
- 6 Big Ideas for Wal-Mart
- Please Stop Picking on Wal-Mart
- Can You Bank on Wal-Mart?
- Battle of the Discounters
You may find that the more you read about the company, the more you like it. (Or not.) One person who likes the firm -- at least as an investment -- is Philip Durell, who heads up our Motley Fool Inside Value newsletter service. He recommended the stock back in May. Indeed, all of Philip's recommendations, on average, are up 22% vs. the S&P's return of 16%. I invite you to test-drive the newsletter for free for a month -- I suspect you might like what you see, which will include two buy recommendations delivered each month.
If you'd rather find great, undervalued investments on your own, go for it. In the big-retailer world, consider Wal-Mart's competitors, Target
Longtime Fool contributor Selena Maranjian owns shares of Wal-Mart and recently had a CAPS ranking of 666 out of 12,354. The Motley Fool has a full disclosure policy.
