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Walmart as an Investment Option

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If you were an investor with a bunch of money, would you invest in Wal-Mart? How do you think it will be doing in the future? Why?

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Solution Summary

This solution provides a view of investing in Walmart versus other potential investment opportunities. It also highlights the issues Walmart is currently experiencing and how it may affect shareholder wealth as well as a final conclusion to invest in Walmart or not.

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We would have to define a bit more specifically what a a"bunch of money" means, but for the present, the answer would be NO. Consider that the goal of the investor is to maximize their wealth position. For the past few years, while Walmart virtually owns the market for lowest priced discount department stores, the price of their shares has stagnated in the $70 range. Now it is fair to say that the Walmart brand will continue to grow, especially with their incursion into neighborhood grocery stores (consider that the margins related to staples and food products should continue to grow based upon conditions related to the economy (still in a recession because prices are increasing faster than wages); conditions related to weather anomalies; conditions related to unemployment; and the like. Walmart is uniquely positioned to take advantage of these types of market ...

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