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Friday, October 06, 2006

Industry Contrasts: Wal-Mart And Target

Stocks: (HD)(TGT)(LOW)(WMT)

Investors have to look no further than September same-store sales to see the catalyst of the market's views of Wal-Mart and Target. Wal-Mart's increase was 1.3%. Target's was 6.7%.

The stocks are trading as if the trend is likely to continue. And, over the last three months, Wall St. seems to have seen the news coming. During the last 90 days, Wal-Mart's stock has risen 4% and Target's is up almost 20%. By way of contrast, two other retailers who go head-to-head, Home Depot and Lowes, have stayed much closer to one another in price over the last three months. Home Depot's stock is flat and Lowes is up 5%.

Wall St. may be looking at the number of stores that Wal-Mart and Target have. Mathematics would say that the smaller company could grow faster, and, at this point that is the case. Wal-Mart may simply have reached a point of saturation, at least in the US. Its stock trades that way.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.
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