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A Big Upgrade for Wal-Mart

By Dave Mock - Updated Apr 5, 2017 at 7:59PM

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This bullish call comes from more than just one analyst.

Every day, the sun rises on Wall Street, and a plethora of professional analysts wake to issue new opinions on stocks. Here at the Fool, we use our "This Just In" column to examine some of these picks -- and the track record of the firm behind them -- so individuals can make better investing decisions.

In addition to following professional banks, anyone can use Motley Fool CAPS to monitor the collective opinions of more than 120,000 members, many of whom demonstrate better investing insight than published analysts do.

More top-performing CAPS members are turning bullish on Wal-Mart (NYSE:WMT) these days, upgrading it from its long-held three-star rank to a more formidable four stars. A community upgrade in CAPS imply a brighter outlook for the stock. Let's peruse CAPS members' nearly 1,000 posted opinions on Wal-Mart to see just why sentiment has improved.

For starters, Wal-Mart is holding up much better in a spending slowdown that is creating desperate times at retailers like Target (NYSE:TGT) and Macy's. And while the company is not immune from such pressures, many investors feel safer investing in giants like Wal-Mart, General Electric (NYSE:GE), or McDonald's (NYSE:MCD), all of which can more easily weather down cycles.

With consumers more focused on finding cheap deals, discounters and low-cost providers are in a much better position than high-end retailers like Abercrombie & Fitch (NYSE:ANF). While discounter Costco (NASDAQ:COST) and many other retailers had declining November comps, Wal-Mart was an outstanding exception, with comparable sales that rose 3.4% in November.

Wal-Mart's year-end promotions demonstrate the heavy competition it's giving Best Buy (NYSE:BBY) and other rival retailers. Its recently launched holiday promotion, "Operation Main Street," includes price rollbacks, text-message alerts to the latest savings opportunities, and a policy to match competitors' advertised prices. This proactive approach to keeping shoppers coming in the doors has already generated $2 billion in free cash flow this year. The company does recognize that results may not be so impressive in the fourth quarter. Still, 87% of the 5,343 CAPS members rating Wal-Mart today remain optimistic, expecting the company to outperform the market.

To read what the very best CAPS analysts are saying now about Wal-Mart -- and see the other winning stocks they're picking -- head on over to CAPS and have a look.

Further fairly priced Foolishness:

The Motley Fool Stock Advisor service looks for companies with strong management poised to beat the market over the long haul. To see all the stocks that have helped Tom and David Gardner beat the market by 27 points on average, take a free 30-day trial.

Fool contributor Dave Mock recently upgraded his Christmas list with a Wii. He owns no shares of companies mentioned here. Wal-Mart, Costco, and Best Buy are Inside Value recommendations. Costco and Best Buy are Stock Advisor picks. The Fool owns shares of Best Buy. The Fool's disclosure policy keeps you off the naughty side of the list.

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Stocks Mentioned

Wal-Mart Stores, Inc. Stock Quote
Wal-Mart Stores, Inc.
WMT
$129.14 (0.21%) $0.27
McDonald's Corporation Stock Quote
McDonald's Corporation
MCD
$261.36 (0.50%) $1.30
Target Corporation Stock Quote
Target Corporation
TGT
$169.67 (2.76%) $4.55
Costco Wholesale Corporation Stock Quote
Costco Wholesale Corporation
COST
$539.82 (0.75%) $4.00
Best Buy Co., Inc. Stock Quote
Best Buy Co., Inc.
BBY
$78.51 (2.84%) $2.17
General Electric Company Stock Quote
General Electric Company
GE
$77.14 (2.95%) $2.21
Abercrombie & Fitch Co. Stock Quote
Abercrombie & Fitch Co.
ANF
$18.82 (4.73%) $0.85

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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