Wal-Mart shares just $2 Away from 52-Week Low, Buy Now?

The Mighty Wal-Mart Stores, Inc. (NYSE:WMT) is less than $2 away from its 52-week low of $46.25 and shares closed the day after-hours at $48.04, could this be the time to buy?

Wal-Mart reports the following in the coming weeks:

May 14, 2009	Q1 2010 Earnings Release  - 12:00PM EDT   Add to calendar
May 14, 2009	Q1 2010 Pre-recorded Earnings Conference Call  - 7:30AM EDT   Add to calendar
May 7, 2009	April Sales Release  - 12:00PM EDT   Add to calendar

The company P/E is at 14.28, which is higher than the market’s, but that’s to be expected given the highly regular nature of the company’s earnings. They also recently announced a dividend increase (the current yield is 2.28%) and that they’re allocating more capital to share buybacks. In this type of environment, that’s a huge demonstration of strength.

Could the P/E increase as well? Sure, but even if it doesn’t, earnings growth, share buybacks and dividends
should produce a low- to mid-teens annual return on the stock. We’ll take that in this environment, especially when we believe the downside is very low.

So what's not to like?

Given the risk that we’re looking at years of sluggish consumer spending, it’s a defensive idea that can complement any portfolio. If conspicuous consumption is “out” on a secular basis and gaudy becomes even more uncool, Wal-Mart is a good way to play that over time.

One additional item to keep in mind is exchange rates. As international revenues have become more prominent, the company feels it when the dollar is strong, as it has been. Longer-term, however, the increasing non-dollar exposure will work in their favor as various pressures on the dollar take hold.

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