Jumping In Early - WMT


Wal-Mart Stores Inc. - WMT - close: 54.14 change: +0.18

Why We Like It:
We have had WMT on our watch list for a while. If the economy stumbles WMT should garner more customers as more affluent consumers downgrade while struggling consumers spend even more of their paycheck at WMT. If the economy improves then WMT should benefit as consumers expand beyond the essentials to higher-margin goods. Investors were unfazed a couple of weeks ago when WMT said Q1 sales would be "challenging".

Initially we had WMT on the watch list with a plan to buy call LEAPS on a dip near $50.00. I don't think shares will correct that much. Instead the stock looks like it's about to breakout higher. If you look at the stock it's been consolidating in the $52-55 level for weeks. You might notice this consolidation is narrowing and I predict WMT will finally start moving higher again.

I am suggesting we jump in early and buy call LEAPS now. More conservative traders could wait for a close over $55.00 instead. Our long-term target is the $63.00 level. The Point & Figure chart is more optimistic with a $68 target. We'll start the play with a stop loss at $49.45.

Company Info:

Walmart serves customers and members more than 200 million times per week at more than 8,416 retail units under 53 different banners in 15 countries. With fiscal year 2010 sales of $405 billion, Walmart employs more than 2.1 million associates worldwide (source: company press release or website)

Use the 2012 January calls (Entry point - now, at current levels)

BUY call 2012 JAN $55.00 (symbol: WWT1221A55) current ask $4.60

Chart of WMT