Tag Archives: Wal Mart

Costco Stock Is Expensive

By John Maxfield, The Motley Fool

Filed under:

There are a handful of companies that arguably define every generation of American consumer. For the current generation, it’s undeniable that Costco fits this bill. But does that mean Costco stock is a buy? Not so fast.

The biggest problem with Costco as an investment isn’t the company itself, but rather the price of its stock. Take the company’s dividend yield. At 1%, it’s less than half of the S&P 500‘s 2.12%. Not to mention the fact that both Wal-Mart and Target yield more than 2% as well.

Beyond this, Costco’s price-to-earnings ratio — which gauges how much an investor must pay for every dollar of earnings — comes in at 23.7. Is that astronomical? No. Lululemon, for example, has a P/E ratio of 35, and many tech companies sport triple-digit multiples.

At the same time, however, the average stock on the S&P 500 trades for 18 times earnings, and both Wal-Mart and Target are valued at multiples between 15 and 16. Looked at it this way, Costco stock sells for a 32% premium over the broader market and a 53% premium over its closest brick-and-mortar competitors.

Suffice it to say, you can probably guess why stock in the warehouse retailer is so dearly priced. In the first place, it’s simply a great company. It offers great products at great prices and, by all appearances, takes excellent care of its employees.

Beyond this, the more quantitative explanation is that Costco’s stock price has simply outpaced its earnings-per-share growth. As you can see in the chart below, over the past five years, it’s returned more than 84% to shareholders since 2008. Yet its EPS has only increased by 57% over the same time period.

COST Total Return Price data by YCharts.

Consequently, unless the latter figure picks up steam and catches the former, there’s a risk that the stock price will come down on a relative basis instead.

Want to learn more about Costco?
Costco’s low prices haven’t just benefited customers — shareholders have walloped the market, returning 11,000% over the past two decades. However, with prices near all-time highs, is the ride over for Costco investors? To answer that and more, The Motley Fool’s compiled a premium research report with in-depth analysis on Costco. Simply click here now to gain instant access to this valuable investor’s resource.

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Source: FULL ARTICLE at DailyFinance

This Is the Real Threat to Inefficient Retailers

By Jacob Roche, The Motley Fool

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A recent article in Bloomberg Businessweek highlighted a problem that should be obvious to many: Cutting costs by laying off employees eventually starts to be counterproductive and hurts the business. There’s trimming the fat, which can be good for a business and improve efficiency and profitability, but past that you’re just cutting into the muscle and bone, which is what the article suggests Wal-Mart is doing.

Dieting too far
The problem is that Wal-Mart has continued to increase its store presence over the last five years, but has only barely increased the number of employees staffing those stores. Wal-Mart opened 3,511 new stores globally between 2007 and 2012, increasing its total square footage by 23%, but only increased its workforce by 5% during that time. As a result, stores are having trouble keeping shelves stocked, and customers are taking their business elsewhere.

This is a topic near to my heart, as I’ve found that Safeway suffers the same problem. It’s not uncommon for my local store to have one employee running the register, with a half-hour-long line snaking all the way to the back of the store, and merchandise simply sitting in crates in the aisles. On a hunch, I compared the number of employees per 1,000 square feet at various stores, and the results are not surprising:

Company

2007 Employees
per 1,000 Sq. Ft.

2012 Employees
per 1,000 Sq. Ft.

% Change

Costco

1.85 

2.00 

8.16%

Wal-Mart

2.42

2.05

(15.02%)

Safeway

2.50 

2.20 

(11.86%)

Whole Foods Market

5.65

5.71

1.06%

Source: Companies’ 10-K filings.

Costco and Whole Foods have increased, or at least held steady, the number of employees staffing their stores, while Safeway and Wal-Mart have both had a sizable drop. Long lines and empty shelves will ultimately encourage customers to go to better-staffed competitors, and that seems to be exactly what has happened over the last few years. Costco and Whole Foods have both dramatically increased sales, while Safeway and Wal-Mart have lagged significantly.

The looming threat
But there’s one company that hasn’t been mentioned yet that has increased its employment far more than even Costco or Whole Foods, and has increased its sales by far more as well. This company has the same sell-everything approach to retail that Wal-Mart and Costco have, and, like Wal-Mart, has been branching into grocery over the last few years, but it has significantly less floor space to keep stocked.

If you guessed Amazon.com , you are correct! Amazon increased its labor force from 17,000 employees to 88,400 from 2007 to 2012, and while it doesn’t have store shelves to stock or front-end registers to run, it does have rapidly growing sales that require more warehouse personnel, more customer service representatives, and other employees to keep things running smoothly.

COST Revenue TTM data by YCharts.

Amazon presents the real threat to inefficient retailers. A customer might be willing to just try Wal-Mart another day, rather than drive all the way to Costco to see if it has an out-of-stock item, but why even

Source: FULL ARTICLE at DailyFinance

NASDAQ Wins the Day, but the Dow and S&P 500 Set New Records

By Matt Thalman, The Motley Fool

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As the S&P 500  and the Dow Jones Industrial Average set new record intraday highs, investors seem to have a lot to celebrate. As of 12:45 p.m. EDT the major indexes are all moving higher. The Dow is up 142 points, or 0.97%, to 14,816. The S&P 500 is up 1.22% to 1,588, but the NASDAQ has risen the most, up 1.8%.

Big technology stocks have pushed not only the NASDAQ higher today, but also the Dow. And at the time of writing, only two of the Dow’s 30 stocks are trading lower: Wal-Mart and Travelers .

Wal-Mart has lost 0.36% of its value on little negative news. The company faces a number of legal issues, and officials reported today that an investigation into Wal-Mart’s lobbying for entry into India will be completed by June. This investigations stems from a bribery scandal that started in Mexico and then spread to other countries around the world. 

Although the company has been plagued by poor news over the past six months, the stock is still up 14% year to date, while the Dow has risen about 13%.

One of the Dow’s big winners this year is Travelers, which has risen 18.1% in 2013. However, shares have dropped 0.4% today. Yesterday Travelers CEO Jay Fishman said his company needs to stop making excuses about the frequency of natural disasters and low bond yields. Fishman further said the company had embarked on a “carefully calibrated strategy of selectively but actively raising rates.” This should give investors confidence that the company will be able to weather future storms while maintaining profitability in the long the run. 

More foolish insight
The retail space is in the midst of the biggest paradigm shift since mail order took off at the turn of last century. Only the most forward-looking and capable companies will survive, and they’ll handsomely reward those investors who understand the landscape. You can read about the “3 Companies Ready to Rule Retail” in The Motley Fool’s special report. Uncovering these top picks is free today; just click here to read more.

The article NASDAQ Wins the Day, but the Dow and S&P 500 Set New Records originally appeared on Fool.com.

Fool contributor Matt Thalman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 
Check back Monday through Friday as Matt explains what caused the Dow’s winners and losers of the day, and every Saturday for a weekly recap. Follow Matt on Twitter: @mthalman5513. 
Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved.

Source: FULL ARTICLE at DailyFinance

Best Advice for New JC Penney CEO: Sell Quickly

By George Bradt, Contributor

BMW X1 EV/Hybrid spy shots

It’s time for JCPenney to follow K-Mart into oblivion.  As one retail expert explained to me, JC Penney was “A place Middle America went to for underwear.” Guess what? These days Middle America has lots of other places to get underwear including Wal-Mart, Target, TJMaxx, CheapUnderwear.com and the like. …read more

Source: FULL ARTICLE at Forbes Latest

3 Mind-Boggling Facts for Apple Bulls

By Daniel Sparks, The Motley Fool

Filed under:

Apple was slammed last week, with shares sliding more than 4%. In fact, the stock came just $0.68 from its 52-week low on Friday. Though the stock has regained some ground this week, there’s no denying that Apple has taken a beating since its September 2012 high around $700 per share. At these levels, the stock has officially entered value-investing territory. Three metrics, in particular, paint a mind-boggling picture of a severely undervalued, highly profitable stock.

Share of profits
Though Apple‘s three-month average market share of smartphones in the U.S. was up sequentially in February 2013 compared to November 2012, according to comScore, the company is undoubtedly losing market share on a year-over-year basis. Apple’s share of U.S. smartphone sales in the three-month period ending February 2013 declined to 43.5% from 47%. Meanwhile, Google‘s Android picked up the slack as its market share rose from 45.4% to 51.2%.

To be fair, Google’s Android is a free mobile operating system, or OS, that is available to any smartphone manufacturer. Nevertheless, Apple’s share of sales is declining.

This is where the first mind-boggling metric comes in. Though Apple is losing market share, its share of profits remains enormous. In the fourth quarter of 2012, for instance, Apple grabbed 72% of worldwide handset profits, according to Canaccord Genuity. Even more notable, that 72% of worldwide profits was achieved on just 21.7% of sales.

Market growth
Bears continue to line up to throw tomatoes at Apple, but no one can deny the enormous and fast-growing markets that Apple operates in. “Gartner expects the smartphone market to essentially double from 2011 to 2014, so Apple could see tremendous revenue growth even if it only grew at the market rate,” Morningstar analyst Brian Colello pointed out. Furthermore, tablet shipments are expected to grow by 70% in 2013 compared to 2012, according to the IT research company. Gartner also projects a sustained upward trend in sales, growing by 32% annually between 2012 and 2017.

FCF yield
Despite Apple‘s massive share of worldwide handset profits and a spectacular market outlook, the stock trades at an unjustifiably conservative valuation.

In a recent article, I compared Apple to slow-growth megacap stocks, including McDonald’s, Wal-Mart, Microsoft, and Intel, using the free cash flow yield — a great indicator of a stock‘s value. Of these four companies, the only one with a free cash flow yield as high as Apple’s (the higher it is, the cheaper the stock) was Microsoft — a company with stalling growth, whose Windows-based PC sales continue to decline. Apple’s FCF yield of 11.3% was more than twice as high as Wal-Mart’s and McDonald’s FCF yields, and 400 basis points higher than Intel’s.

Keeping the faith in strong fundamentals
It’s easy to point fingers at CEO Tim Cook or to criticize Apple for lack of innovation, but there is no denying the cash the company is producing. With indisputable leadership in terms …read more

Source: FULL ARTICLE at DailyFinance

Supermarkets Preparing to Eat Restaurants' Lunch

By Rich Duprey, The Motley Fool

Filed under:

Supermarkets in the U.S. generated around $634 billion in revenues last year, according to the Census Bureau, with Wal-Mart owning the lion’s share. Groceries counted for 55% of the retail king’s $469 billion in total revenues in 2012, sales of which were up about 5% from the year-ago period.

That’s about the same growth rate in sales the top 500 restaurant chains enjoyed last year, but far lower than the top 10 fastest-growing chains’ 20% average growth rate, which underscores why supermarkets may be looking to get more into the restaurant business. Consider it a fast-causal dining experience while doing your grocery shopping.

Cleanup in Aisle 3
Recently privately held Kings Food Markets launched a store in Gillette, N.J., that will feature several new concepts including its MarketSquare restaurant-style food-service offerings. You’ll be able to buy fully prepared meals, and there is also a cheese shop and a coffeehouse that serves cappuccino, espresso, and pastries. Price Chopper plans to offer a similar concept later this year when it opens a new grocery store with 16 quick-service areas.

It’s an idea gaining a lot of traction, though not a new one for some supermarkets. Tops Friendly Markets, for instance, has offered a Tim Hortons in some of its stores for years. Of course, Whole Food Markets has long mastered the melding of the two concepts. Sales there rose 4% to $12.2 million; prepared foods account for some 19% of the total.

A flu shot and a meal
Moving beyond just the deli counter, supermarkets are seeking to attract some of those dollars that have traditionally flowed to restaurants in an effort to shore up their own bottom line. The thinking is that money spent at restaurants is money not spent at the grocery store. It’s a trend that’s crossing over even at convenience stores, where pharmacy chain Walgreen is looking to blur the distinction between its stores and fast-casual restaurants with hand-rolled sushi and sashimi, baristas, and self-serve frozen yogurt stations.

Although grocery stores might be able to siphon off customers from restaurants, tapping into the popularity of fast-casual chains’ ability to provide a reasonable mix of price and quality food, it’s not a two-way street: Panera Bread can’t easily open a produce aisle to attract shoppers. And that may pose a risk to restaurants, which are already competing for scarce discretionary dollars.

According to the Knapp-Track Index of monthly restaurant sales, sales at casual-dining establishments fell 5.4% in February, which was on top of a 0.6% decline in January and a 1.6% drop in December. The tax hikes President Obama pushed through that took effect Jan. 1 seem to be taking their toll. 

As noted by the CEO of Brinker International , the owner of Chili’s and Maggiano’s Little Italy, “casual dining is not necessarily the bright shiny star that it used to be.”

Now with supermarkets elbowing their way into the space, expect the pressure to build even more on restaurants. It may be …read more

Source: FULL ARTICLE at DailyFinance

Nokia Lumia 521 to Launch on T-Mobile in May

By Evan Niu, CFA, The Motley Fool

Filed under:

No. 4 wireless carrier T-Mobile will be exclusively launching Nokia‘s Lumia 521 phone starting in May, the company announced today.

The carrier had said in February that it would offer the device without detailing a specific time frame. The Lumia 521 is positioned as an affordable device. However, T-Mobile did not provide specific pricing details or a specific date in May for launch.

The Lumia 521 willl feature a 4-inch display and 5-megapixel camera, and offer several of Nokia’s first-party services such as Nokia Music. The device will be powered by Microsoft Windows Phone 8. T-Mobile plans to distribute the Lumia 521 through its retail stores, as well as Wal-Mart and Microsoft retail locations.

T-Mobile currently offers only two Windows Phone devices, the HTC 8X and Lumia 810.

link

The article Nokia Lumia 521 to Launch on T-Mobile in May originally appeared on Fool.com.

Fool contributor Evan Niu, CFA, has no position in any stocks mentioned. The Motley Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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Read | Permalink | Email this | Linking Blogs | <a target=_blank href="http://www.dailyfinance.com/2013/04/09/nokia-lumia-521-to-launch-on-t-mobile-in-may/#comments" title="View reader …read more

Source: FULL ARTICLE at DailyFinance

Earning Season Begins, and the Markets Move Higher

By Matt Thalman, The Motley Fool

Filed under:

Now that earnings season is finally here, investors can focus on more of the important factors: earnings, revenue, margins — all the fun stuff. Alcoa kicked things off last night, and although the company beat earnings estimates, a revenue decline has some investors concerned.

But the company’s slight misfortune has not held back the markets today. As of 12:50 p.m. EDT, the Dow Jones Industrial Average is up 51 points, or 0.35%. The S&P 500 and the NASDAQ have both risen 0.28%. While the markets are climbing, a few of the Dow’s big components are being left behind.

McDonald’s has lost 0.5% today. Recently, several hundred fast-food workers in New York City gathered to protest their pay, which averages $8.25 per hour in the state of New York. The protest has some wondering whether a statewide, or even companywide, strike would make a difference. But many doubt that a walkout would change the status quo, pointing to Wal-Mart workers’ long and varied disputes with their employer. 

Shares of General Electric are down 0.5% today. One reason for the decline is the company’s announcement yesterday that it will purchase Lufkin Industries for $3.1 billion. The purchase price is a 38% premium over Lufkin’s closing price of last Friday. Some shareholders and analysts believe GE overpaid for the oilfield equipment manufacturer.  

Shares of IBM are flat, having recovered from earlier losses, as Hewlett-Packard releases its newest servers, the Moonshot line. The Moonshot is expected to outperform traditional server systems in nearly every way imaginable. As demand for cloud computing grows, customers will want servers designed to handle large workloads at high speeds — servers like the Moonshot. If HP’s server is as good as advertised, IBM may experience some short-term effects, but it will likely bounce back if it can produce a competitive device in the future. 

More on McDonald’s
McDonald’s turned in a dismal year in 2012, underperforming the broader market by 25%. Looking ahead, can the golden arches reclaim their throne atop the restaurant industry, or will this unsettling trend continue? Our top analyst weighs in on McDonald’s future in a recent premium report on the company. Click here now to find out whether a buying opportunity has emerged for this global juggernaut.

var FoolAnalyticsData = FoolAnalyticsData || []; FoolAnalyticsData.push({ eventType: “TickerReportPitch”, …read more

Source: FULL ARTICLE at DailyFinance

Is Monsanto Worthless?

By Sara Murphy, The Motley Fool

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The campus of the FDA‘s Center for Food Safety and Applied Nutrition is under siege today, and it has everything to do with Monsanto . Members of the Occupy Monsanto movement are staging an all-day “eat-in” to label food products that contain genetically engineered (GE) ingredients. They’re easy to dismiss, like an especially curmudgeonly Facebook commenter who described them as “hordes of crazed, anti-Monsanto, vegetarian hippies” did. That may well be true, but they are part of a broader movement that could pose a challenge to ag biotech’s comfortable dominion over our food supply.

Label it
There is a growing movement among grassroots activists, NGOs, and natural and organic food companies to require labeling of food products containing GE ingredients. Whole Foods , the leading natural foods grocer, recently committed to labeling all of its products voluntarily within five years. Big Food companies spent heavily on campaigns against a proposition in California that would have mandated labeling and successfully torpedoed the bill. But there’s more where that came from. Vermont, Connecticut, and Iowa all have some form of labeling requirement making its way through the legislative process.  

The New York Times recently reported that 20 major companies, including PepsiCo, ConAgra, and Wal-Mart, met in Washington, D.C., to lobby the FDA for a federal GE-labeling law. The idea is that companies prefer one federal law to a proliferation of state laws that would add to their compliance burden. Implicit in that notion is that a labeling requirement is inevitable.

All three branches of government?
The Supreme Court heard arguments on Feb. 21 in the case of Bowman v. Monsanto Co. The central question is whether farmers who buy Monsanto’s Roundup Ready soybean seeds are free to do as they wish with the seeds harvested from those plantings. The justices seemed almost unanimously opposed to the farmers’ arguments, and they appear poised to rule in Monsanto’s favor. In a highly unusual move, the U.S. government not only filed an amicus brief supporting Monsanto but also sent a government attorney to argue on the company’s behalf, highlighting the Obama administration’s support for several elements of Monsanto’s argument.

In March, Congress passed and President Obama signed H.R. 933, a law that anti-GE advocates have dubbed the “Monsanto Protection Act.” Section 735 strips federal courts of the authority to halt the sale and propagation of genetically modified seeds and crops if concerns about health risks arise during safety tests. Did you catch that? Let’s pretend we’re talking about cribs instead of seeds. The corollary law would then say that if little babies’ fingers kept getting chopped off in crib safety testing, the courts couldn’t get involved. Disgraceful.

Senator Roy Blunt (R-Mo.), one of section 735’s biggest supporters, worked with Monsanto to craft the language in the bill. Section 735 is attached to a continuing resolution that only holds for the next six months, so it is not yet …read more

Source: FULL ARTICLE at DailyFinance

Will Wal-Mart Be the Death of Near-Field Communications?

By Rich Duprey, The Motley Fool

Filed under:

According to a recent Harris Interactive survey, most consumers feel smartphone payments will eventually replace credit and debit cards and cash for most purchases but it’s likely not going to happen within the next five years.

That bodes well for the long-term outlook for chip makers like NXP Semiconductors and Skyworks Solutions , which are leaders in the field of near-field communications, or NFC. That’s the technology that allows mobile devices to securely communicate with a payment terminal. Wave your NFC-enabled smartphone in front of an NFC-enabled terminal and you can easily make a payment.

Objects are closer than they appear
The interest expressed in the survey is part of the reason behind why NXP feels 2013 is the year that NFC technology takes off. Google has been in the forefront of the issue through its Wallet mobile payment system and Android smartphones like Samsung’s Galaxy have been equipped with NFC chips to take advantage of it wherever it’s available. Indeed, Samsung recently partnered with Visa to provide an NFC platform that financial institutions can trust.

Banks will be able to load payment account information to a secure chip embedded in Samsung devices using Visa’s mobile provisioning service linked to Samsung’s service that creates secure data storage domains for card issuers.

Notably, however, Apple has yet to jump into the fray. Although many watchers had anticipated the iPhone 5 to include an NFC chip, it was not to be, even though it had acquired such capabilities through its AuthenTec acquisition last year. And with Skyworks already a chip supplier for the iPhone, should Apple decide it needs to be a part of the NFC revolution, it has ready access to a key player in the field.

Scanning the horizon
Yet retail king Wal-Mart may be leading the way in killing off the chances of NFC gaining a real foothold. Rather than investing in the expensive new terminal upgrades that would be required to make NFC in its stores a reality, it’s rolling out an iPhone app called Scan & Go that allows consumers to scan and bag their purchases while shopping and simply scan a quick-response pixilated QR code square at the checkout terminal to complete the purchase.

While that may be a means for it to ultimately save money on cashier salaries, it could provide the pathway for other retailers to follow. Wal-Mart is expanding the test program to 200 stores in 14 markets, and though the app is only available for the iPhone, it’s easy to see that (depending upon its success) it could eventually roll out to all 14,000 stores and be available across all smartphone platforms.

Stop & Shop supermarkets have offered a similar app for both iPhones and Android devices for several years, but Wal-Mart’s entry could be the thing that brings it mainstream. Because near-field communications has taken longer than expected to get up and running, just as widespread adoption looks to be within …read more

Source: FULL ARTICLE at DailyFinance

Family Dollar Earnings: An Early Look

By Dan Caplinger, The Motley Fool

Filed under:

Spring is finally here, and a new earnings season is right around the corner. On Wednesday, Family Dollar will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they’ll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you’ll be less likely to make an uninformed, knee-jerk reaction to news that turns out to be exactly the wrong move.

The deep-discount industry has seen huge growth in recent years, as a sluggish economic recovery has left millions of Americans behind, struggling to make ends meet. Yet highly competitive conditions in the industry have left Family Dollar fighting with a number of peers for market share. Let’s take an early look at what’s been happening with Family Dollar over the past quarter and what we’re likely to see in its quarterly report on Wednesday.

Stats on Family Dollar

 

 

Analyst EPS Estimate

$1.23

Change From Year-Ago EPS

7%

Revenue Estimate

$2.89 billion

Change From Year-Ago Revenue

17.6%

Earnings Beats in Past 4 Quarters

1

Source: Yahoo! Finance.

Is Family Dollar’s stock its best bargain?
Analysts have gotten more pessimistic about Family Dollar‘s earnings in recent months, as they’ve cut their estimates on the just-ended quarter by $0.04 per share and notched $0.09 off full-year fiscal 2013 earnings-per-share figures. The stock has reflected that dour view, dropping 6% since the beginning of the year.

After years of strength, Family Dollar has recently found itself on shakier ground. The same slow economic conditions that led to its strong performance during the 2008 recession continue to exist today, but now, even deep-discount retailers have proven vulnerable to tough times among its customers.

In particular, a combination of rising payroll taxes, higher prices at the pump, and weak employment growth has held spending back among lower-income shoppers. Wal-Mart‘s tepid 1% rise in same-store sales in the U.S. might have been good news for Family Dollar in years past, but Family Dollar‘s move toward more food items has put margins under pressure, and the stock hasn’t responded favorably.

Perhaps most troubling for Family Dollar are the moves that its competitors are making. Dollar General has done its best to hold off rising competition by aggressively expanding, with plans to open 635 new stores this year. The move could hurt short-term margins, but it throws down the gauntlet for Family Dollar to keep up the pace. Meanwhile, Dollar Tree reported surprisingly strong results in its most recent quarter as its cost-cutting bore fruit for investors.

In Family Dollar‘s quarterly report, watch for the company to address how it plans to respond to Dollar General‘s aggressive expansion plans. In this increasingly dog-eat-dog industry, Family Dollar can’t afford to let its rivals get too far ahead if it wants to retain its leadership …read more

Source: FULL ARTICLE at DailyFinance

Why Target Is Poised to Keep Poppin'

By Brian Pacampara, The Motley Fool

Filed under:

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool’s free investing community, retail giant Target has earned a respected four-star ranking.

With that in mind, let’s take a closer look at Target and see what CAPS investors are saying about the stock right now.

Target facts

 

 

Headquarters (founded)

Minneapolis, Minn. (1902)

Market Cap

$44.2 billion

Industry

General merchandise stores

Trailing-12-Month Revenue

$73.3 billion

Management

Chairman/CEO Gregg Steinhafel

CFO John Mulligan

Return on Equity (average, past 3 years)

18.7%

Cash/Debt

$788.0 million/$17.7 billion

Dividend Yield

2.1%

Competitors

Costco Wholesale

Kmart

Wal-Mart Stores 

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 95% of the 2,569 members who have rated Target believe the stock will outperform the S&P 500 going forward.

Just last week, one of those Fools, All-Star witness1260, succinctly summed up the Target bull case for our community:

I have to say, I really like Target’s business model. They’ve convinced people to pay a higher price for the same item at their store versus at a rival’s (looking at Wal-Mart). … I think they’ve created a significant advantage here with their branding. I think that’s an advantage that can stick as well, because the economy is improving, and if you think about it Wal-Mart shoppers want to become Target shoppers because it tells them they’re doing well financially. I can see Target continuing to grow long-term. Clearly they see opportunities for growth as well. They’ve jacked up [plant property and equipment] spending.

To learn about two other retailers with especially good prospects, take a look at The Motley Fool’s special free report: “The Death of Wal-Mart: The Real Cash Kings Changing the Face of Retail.” In it, you’ll see how these two cash kings are able to consistently outperform and how they’re planning to ride the waves of retail’s changing tide. You can access it by clicking here.

Want to see how well (or not so well) the stocks in this series are performing? Follow the TrackPoisedTo CAPS account.

The article Why Target Is Poised to Keep Poppin’ originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Costco Wholesale. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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b.type=”text/javascript”;b.async=!0;b.src=(“https:”===c.location.protocol?”https:”:”http:”)+
…read more

Source: FULL ARTICLE at DailyFinance

All Eyes on Alcoa as the Dow Kicks Off Earnings Season

By Dan Carroll, The Motley Fool

Filed under:

Earnings season is back, with weeks of quarterly reports on tap for Wall Street to pick apart and analyze. So far, however, the Dow Jones Industrial Average is taking a cautious approach to the start of the season: As of 2:20 p.m. EDT, the blue-chip index sits a hair below breakeven. Few Dow members are moving far today, and the first company on the index to report — aluminum producer Alcoa , which releases earnings after the closing bell today — has barely budged. Let’s get caught up on which way the Dow’s Monday is headed.

Eyes turn to earnings
Alcoa’s on tap for its earnings call this afternoon, but many analysts aren’t expecting much from a company that’s been hit hard by sluggish economic growth around the world. The stock has slumped considerably in 2013, ranking among the worst Dow members in year-to-date performance as aluminum prices remain under pressure and China‘s slowdown hurts the company’s growth prospects. Alcoa’s gains of 0.9% today won’t impress anyone, and all eyes are set on the coming earnings report. Analysts expect falling revenue and uninspiring EPS figures.

Other stocks around the Dow are having better days, although no member of the index has lit up investors’ portfolios so far. Two big retail names are headed higher: Home Depot and Wal-Mart rank near the top of the Dow with respective gains of 1% and 1.3%. Neither company reports earnings this week, but these firms comprise a tale of two economies. Wal-Mart’s been hampered by tightening consumer spending and the expansion of the payroll tax; the company’s guidance for this quarter didn’t strike a chord with many industry observers when announced back in February.

Home Depot, meanwhile, is looking to capitalize on a housing market that’s primed to explode as the U.S. population keeps increasing. The stock has jumped more than 10% since the start of 2013, and if home sales pick up the pace, Home Depot will be in the driver’s seat of the Dow.

Elsewhere, Disney‘s another leader of the Dow today, up 1.2%. The stock has hit a new all-time high today, even as reports circulate that the company’s planning a round of layoffs in its studio and consumer products divisions. Disney announced last week that game developer LucasArts, which Disney acquired when it bought LucasFilm, will be shut down. Layoffs elsewhere in the company wouldn’t be a stretch if Disney is looking to slash costs and consolidate — a smart move, considering the giant acquisitions of Marvel and LucasFilm in the recent past.

On the other side of the Dow today, Johnson & Johnson is leading the index lower, down 1.3%. JPMorgan downgraded the stock to “neutral” from “overweight” today, sparking the sell-off. Despite that move, however, J&J remains one of the broadest and most diverse companies in the health care sector. Its 15.8% run-up since the start of 2013 gives room for pause, but in …read more

Source: FULL ARTICLE at DailyFinance

Wal-Mart Dominates Bond-Buying

By Russ Krull, The Motley Fool

Filed under:

New issues in U.S. corporate bond markets topped $24 billion last week, with one big borrower accounting for more than 20% of the total. Here are a few of the highlights.

Wal-Mart stocked the shelves with $5 billion spread over three-, five-, 10-, and 30-year notes. The SEC filing listed “general corporate purposes,” including share buybacks, refinancing, acquisitions, and capital expenditures. The retail giant’s credit rating let it price the bonds at the low coupon rates shown below. The spreads over comparable U.S. Treasuries range from 0.26 to 0.88%.

Principal Amount

Coupon Rate

Note Matures

$1 billion

0.6%

April 2016

$1.25 billion

1.13%

April 2018

$1.75 billion

2.55%

April 2023

$1 billion

4%

April 2043

Source: Wal-Mart 424B2 SEC filing dated April 5, 2013.

Even though Wal-Mart wasn’t specific, let’s pull the refinance thread. A search at FINRA‘s bond center shows Wal-Mart with five bond issues maturing over the next 12 months. The total principal amount is $4.195 billion, with coupon rates ranging from 0.75% to 7.25%. The annual coupon payments on the $5 billion of newly issued paper are nearly $59 million per year lower than the coupon payments for the $4.195 billion of paper maturing over the coming year. Of course, Wal-Mart didn’t say how much of the new money would go to redeeming maturing bonds.

Interested in an investment-grade bond paying 7.75%? Barclays just issued $1 billion of 10-year notes that fit the bill. Before calling brokers to place orders on a deal that seems too good to be true, a Foolish investor checks to see if there’s a catch. And there is: The bonds are contingent convertible, meaning they convert to something else if some contingent trigger event happens. In this case, if Barclays’ tier-one common equity ratio drops below 7%, the bonds convert to worthless paper. So much for bonds as low-risk investments.

DISH Network subsidiary DISH DBS broadcast new five- and seven-year issues for a total of $2.3 billion to be used for “general corporate purposes, which may include wireless and spectrum-related strategic transactions.” The original plan was an issue of approximately $1 billion. DISH didn’t say what happened between Tuesday and Wednesday to make “approximately” mean “more than twice as much.”

Home Depot hammered out $2 billion split between 10- and 30-year paper. At least some of the money is going to shareholders via share repurchases, while the rest will be used for the ever-popular “general corporate purposes.”

I see two takeaways from last week’s new issues. First, low rates continue to save money for companies refinancing debt, borrowing for capital expenditures, or even repurchasing shares. Second, bond research can’t stop with yield and credit rating. If something’s priced out of line with the rest of the market, there’s usually a reason.

Play it safe
If you’re on the lookout for high-yielding stocks, The Motley Fool has …read more

Source: FULL ARTICLE at DailyFinance

These 11 Stocks Spend the Most on Dividends

By Dan Caplinger, The Motley Fool

Filed under:

Investors want dividend stocks for their solid income, dependable returns, and relative stability in the face of an increasingly shaky stock market. With the S&P 500 near record highs, the fact that dividend stocks can provide some ballast against overall market declines looks more attractive than ever.

But looking at raw dividend yield can mislead you into buying stocks that aren’t as stable as you might think. As a better alternative, let’s instead look at the 11 stalwart blue-chip companies that paid more than $5 billion in dividends to shareholders during 2012, according to figures from S&P Capital IQ.

Rank

Company Name

Amount Paid in Dividends

1

AT&T

$10.24 billion

2

ExxonMobil

$10.09 billion

3

General Electric

$7.19 billion

4

Microsoft 

$6.97 billion

5

Chevron

$6.84 billion

6

Johnson & Johnson 

$6.61 billion

7

Procter & Gamble

$5.88 billion

8

Philip Morris International 

$5.40 billion

9

Wal-Mart

$5.36 billion

10

Verizon

$5.23 billion

11

Merck

$5.12 billion

Source: S&P Capital IQ.

Looking at these 11 stocks, you can see some general trends. Certain industries are better represented than others, as their business models lend themselves more to generous dividend payouts than those of other companies. Perhaps the most obvious example is the telecom industry, in which both AT&T and Verizon have spent massive amounts of capital building out their respective wireless networks. Yet despite having to service extremely high levels of debt to repay what they borrowed to build those networks, dependable monthly income from millions of subscribers provides more than enough cash flow both to pay interest and principal on their debt and to return capital to shareholders. As long as their services remain in demand, Verizon and AT&T should remain near the top of this list.

Energy stocks ExxonMobil and Chevron also appear near the top of the list, and although the energy industry involves much different operational aspects from telecom, oil and gas companies have some of the same business-model characteristics. Finding reserves and drilling wells require substantial upfront capital investment, but once production begins, the profits are substantial enough to more than make up for the carrying cost of those upfront capital expenditures. Even with natural gas prices being far from ideal from a profitability standpoint, great conditions in the refining business have helped these integrated oil giants produce even more free cash flow to return to shareholders.

Get your share of dividends
If you want income from your investments today, dividend-paying stocks are your best bet. These stocks pay billions to their investors, and they’re among the most solid prospects in the market. That’s a powerful combination that you should consider closely for your portfolio.

If you’re looking for some more long-term investing ideas …read more

Source: FULL ARTICLE at DailyFinance

Football Cards: 2013 NFL Draft Cause for Concern?

By Jeff Hwang, The Motley Fool

Filed under:

Last year was a banner one for football cards, highlighted by an unusually strong 2012 NFL rookie class.

That rookie class featured what looks to be at least three elite quarterbacks, including Robert Griffin III of the Washington Redskins, Russell Wilson of the Seattle Seahawks, and Andrew Luck, who set single-season and single-game rookie passing yardage records and led an Indianapolis Colts team that was the league’s worst in 2011 to 11 wins and the playoffs in 2012. Griffin and Wilson both ranked in the NFL‘s top five in passer rating, and both led their teams to the playoffs as well. Ryan Tannehill of the Miami Dolphins could very well join this elite group in the next year or two.

The 2012 draft class also had two rookie running backs who ended up in the top five in the league in rushing yardage — Doug Martin of the Tampa Bay Buccaneers, and sixth-round pick Alfred Morris of the Washington Redskins — as well as a rookie linebacker in Luke Kuechly of the Carolina Panthers, who led the league in tackles. In addition, RB Trent Richardson of the Cleveland Browns and wide receiver Justin Blackmon of the Jacksonville Jaguars — the third and fifth overall picks in the 2012 NFL Draft, respectively, may yet pan out as elite players.

The strong rookie class has made its impact on cardboard prices. As demand has increased while supply has dried up, blaster boxes of 2012 Topps Chrome Football, which sold for $19.99 at retail at Target and Wal-Mart, are now going for $30 to $35 a pop on eBay. Meanwhile, 12-box hobby cases of the same set — which could be had for less than $1,300 as recently as January — are now pushing $1,700 to $1,800 per case.

With the 2013 NFL Draft just weeks away — and with the first 2013 NFL sets featuring players who haven’t even been drafted yet are already on the market — are we in for an encore?

On one hand, retailers and collectors alike have expressed concern over what is perceived to be an exceptionally weak 2013 NFL draft class. On the other hand, at last month’s Industry Summit in Las Vegas, card manufacturers were quick to point out that players can emerge seemingly out of nowhere. After all, Wilson was a third-round pick, while Alfred Morris flew so under the radar as a sixth-round selection that he wasn’t even included in the 2012 Topps Chrome set.

Are the card manufacturers right to be optimistic?

The short answer is probably not. Following is a list of the top 16 base rookie cards by ungraded book value from the Topps Chrome Football sets from 2004 to 2012. Also included are their graded BGS 9.5 Gem Mint values where available according to Beckett.com, as well as the adjusted multiple (the graded value multiple to ungraded book value, adjusted for the cost of getting a card graded, which is assumed to be …read more

Source: FULL ARTICLE at DailyFinance

Target's Latest Electronics Disaster: Best Buy and RadioShack

By Rich Duprey, The Motley Fool

Filed under:

One of the things electronics retailer Best Buy had hoped to use to set itself off from the competition and thwart the effects of “showrooming” from online rival Amazon.com , was its tech support staff that could set up, install, and repair the electronic gadgets and products it sold. Providing service through its Geek Squad instead of just offering product and price would be a key differentiator for it.

It hasn’t quite worked out that way, but seeking out opportunities to expand the brand has led it to partnerships in some unlikely places, like at eBay, where it offers tech support on gadgets won at auction or bought at the site, but also at more traditional retailers such as Target .

In search of pocket protectors
Yet much like its homegrown efforts, the branding opportunities seem to be hit or miss. Earlier this week, Target announced it was severing its relationship with the tech guys in the black-and-white Volkswagen Beetles, saying the six-month experiment had run its course and it was not renewing the partnership.

The discount retailer has been in sort of an identity crisis of its own lately, throwing a lot of options at the wall to see what sticks in an effort to jump-start sales. When it comes to electronics, however, not much has clung as it also recently ended its failed store-within-a-store kiosk concept it had with Radio Shack .

Unlike the Radio Shack pairing, where there were some 1,400 kiosks set up in its stores, Target’s foray into tech support was much more limited — just 29 stores in Denver and Minneapolis. In both cases, though, the problem doesn’t seem to exist within the electronics retailers, but rather that Target isn’t exactly a destination spot for gadgetry. Its lineup of products may be solid, but analysts have noted they haven’t been as aggressive as their peers in cutting prices.

Shades of Circuit City
Target’s hardlines division includes electronics (as well as video game hardware and software), but also music, movies, books, computer software, sporting goods, and toys. Even so, it represented only 18% of the retailer’s revenues in 2012, down from 20% two years ago. In the fourth quarter, the segment suffered a drop in sales in the mid-single digits, with electronics themselves experiencing the worst falloff.

That’s probably what led Target to agree to a year-round price-matching scheme, as Best Buy did, to meet the threat that Amazon poses. That still might not be enough to fend off its middle-of-the-road strategy, straddling the deep discount world of Wal-Mart on one side and mid-tier retailers such as Kohl’s, Macy’s, and J.C. Penney on the other. 

After all, the only thing usually found in the middle of the road are dead opossums and flattened squirrels. And if it wants to avoid that fate, Target’s going to need more than cute tricks like wireless kiosks and tech geeks to revive its electronic sales strategy.

Circuit overload
The battle between bricks-and-mortar stores and e-commerce …read more

Source: FULL ARTICLE at DailyFinance

PriceSmart Earnings: An Early Look

By Dan Caplinger, The Motley Fool

Filed under:

Spring is finally here, and a new earnings season is right around the corner. Next Tuesday, PriceSmart will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they’ll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you’ll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

PriceSmart isn’t a name you’ll see in the U.S., but the company has taken the warehouse-club model south of the border and turned it into a thriving business throughout Latin America and Caribbean. Can the company keep up its growth pace? Let’s take an early look at what’s been happening with PriceSmart over the past quarter and what we’re likely to see in its quarterly report on Tuesday.

Stats on PriceSmart

Analyst EPS Estimate

$0.77

Change From Year-Ago EPS

15%

Revenue Estimate

$609.7 million

Change From Year-Ago Revenue

10.9%

Earnings Beats in Past 4 Quarters

2

Source: Yahoo! Finance.

Is PriceSmart’s stock a good bargain?
Analysts have had mixed views on PriceSmart recently, reining in their estimates for the most recent quarter by a penny per share but boosting their full-year fiscal 2013 consensus by $0.03 per share. The stock has also had a tepid performance, with share prices up less than 3% since the beginning of 2013.

Given PriceSmart’s business model, investors inevitably make comparisons with U.S. warehouse king Costco and its hugely successful business model of reaping the bulk of its profit from membership fees. Right now, PriceSmart looks a lot like Costco did 25 years ago, with rapidly growing sales but plenty of untapped potential. For PriceSmart, that potential could come from southward expansion into key South American markets such as Brazil, as the company thus far has concentrated on the Caribbean and Central America for most of its stores.

Source: PriceSmart investor relations.

But competition may be coming for PriceSmart. Last month, Wal-Mart got environmental approval for a store in Costa Rica, directly challenging PriceSmart’s home territory.

Still, for now, PriceSmart has kept itself growing at a strong pace. In February, the company reported an 8% increase in sales with a jump in same-store comps of almost 9%. With the announcement of a new club coming to Honduras next year, PriceSmart remains on a steady path to growing its presence throughout the region.

In its earnings report, watch for PriceSmart to discuss its longer-term plans for expansion. With the prospects that Brazil could bring the company, investors won’t want PriceSmart to wait too long before making its move southward.

PriceSmart is smart to follow Costco’s path, as its low prices haven’t just benefited customers — shares have walloped the market, returning 11,000% over the past two decades. However, with …read more

Source: FULL ARTICLE at DailyFinance

Why Wal-Mart Needs More Workers

By Alyce Lomax, The Motley Fool

Filed under:

The U.S. economy continues to struggle with some negative drags, not least of which is the still-high 7.7% unemployment rate. Many companies are fearfully sitting on cash or reluctant to hire more workers because of economic uncertainty when, in fact, more employed people are exactly what we need to get the economy going again.

Discount giant Wal-Mart employs a mind-boggling 1.3 million Americans. Although Wal-Mart currently has 120,000 fewer workers than it did in 2008, it’s increased its store count by 455.

Now Bloomberg has reported that a large number of Wal-Mart customers are complaining of empty shelves, cashier shortages, and long lines that make life frustrating. In some cases, these disgruntled customers have started shopping elsewhere because they couldn’t find the items they needed or couldn’t tolerate the time it took to check out.

In response, a Wal-Mart spokeswoman told Bloomberg, “The premise of this story, which is based on the comments of a handful of people, is inaccurate and not representative of what is happening in our stores across the country.” Bloomberg’s data referred to 1,000 emailed customer complaints from all over the United States.

If you think about it, the idea that things may be going awry at many Wal-Mart stores is perfect common sense. If there’s hardly anybody to do the work, of course lines build up and products are missing from shelves. In addition, the overworked employees are also probably not jazzed about their situation.

It sounds as if Wal-Mart definitely needs more employees, or else it could lose serious market share. Discounts are far less attractive when they mean wasted time, effort, and even money.

The fall of the falling prices
How could Wal-Mart come to this?

The company faltered during recessionary times, struggling to boost sales even when its low prices should have drawn more customer traffic. Some of its low-income, bargain-hunting customers traded down to dollar stores, and other big-time competitors, including Costco and Target , probably also lured some customers away.

Although some signs recently implied a possible turnaround at Wal-Mart, well, think about it. It’s looking better after it fought mightily to kick its American business back into gear and get sales growing again several years ago. It looks as if profitability is being juiced by squeezing workers, not to mention possibly skimping on having enough labor to adequately man all stores.

Meanwhile, Costco has done just fine during tough economic times. In its most recent quarter, membership revenues increased 15%, implying that its customers are still pretty happy with its service and willing to pay for the privilege of stocking up there.

Speaking of which, Wal-Mart-vs.-Costco consumer sentiment heated up last fall because of Wal-Mart’s low wages and shoddy benefits for its employees, resulting in labor union campaigns. Costco is a crown jewel in retail in terms of offering its employees living wages and good benefits; Wal-Mart, Target, and Kohl’s all skimp on pay. According to independent IBISWorld research compiled in 2011, …read more

Source: FULL ARTICLE at DailyFinance