Wal-Mart Stock Price Soars 70 Percent in Six Months

Analyst says retailer is returning to ‘days of old’ with consistently high same-store sales

Stock in Wal-Mart Stores Inc. has skyrocketed, more than doubling in the past year, up more than 70 percent in six months and at one point this month up 14 percent in 12 trading days.

The reason, if it’s possible to explain the movement of a stock, is that Wal-Mart continues to dominate the retail sector.

John Lawrence, a research analyst with Morgan Keegan & Co. in Memphis, says the company is “running the business better not only in the Wal-Mart division but also in its Sam’s Club division.”

“And then they have this period where they keep reporting 9-10 percent same-store sales growth,” Lawrence says. “It’s like the days of old for Wal-Mart.”

International growth

Additionally, Lawrence says Wal-Mart’s international presence is beginning to give the company a name across the globe.

Earlier this month, Wal-Mart announced that it had bought four South Korean stores and plans to develop six more sites soon.

That comes after the announcement in June that Wal-Mart plans to build at least six more stores in China in the next two years, which would triple its locations in the world’s most populous country. Last year, Wal-Mart acquired German retailer, Wertkauf Gmbh.

“Canada has been an absolute gold mine [for Wal-Mart],” Lawrence says. “Mexico will be a great long-term situation for the company.

“They continue to learn things from operators overseas, things they can employ back in the States. There are a lot of good operators overseas. The German operator was very good. The other point is the availability of some very good retailing talent they can bring into the Wal-Mart organization.”

Morgan Keegan rates Wal-Mart as “outperform,” even though it’s selling around its all-time high.

“Our view about the time of the annual meeting [in early June] was that the target price was in the middle 50s,” Lawrence says. “We think now the stock can go to the middle 70s.”

Lawrence expects Wal-Mart’s stock to split but he’s uncertain when it will happen.

“We were somewhat surprised that they didn’t split it during the time of the annual meeting. but we anticipate that, over time, it will happen,” Lawrence says.

John Menzer, Wal-Mart’s chief financial officer, told The Wall Street Journal this month that, for now, the company has decided to hold off on a stock split. But, he added, Wal-Mart is still open to the possibility.

“You obviously want to take care of your small shareholders,” he says.