Wal-Mart’s Recipe in Tough Times

Al Meyers, portfolio Inflatable Pool Slide manager of AMBS Investment Counsel, says he might be forced to sell his Wal-Mart stock soon according to his investment criteria. “They’ve got to deliver [higher] earnings or it’s going to be difficult to justify owning the stock,” he says.

Many on Wall Street are betting Wal-Mart will keep beating expectations. The tough economy and high gas prices have made things hard for almost everyone, including most retailers and the U.S. consumer.

But Wal-Mart has arguably succeeded because of the tough times: Others’ pain is Wal-Mart’s gain. Wal-Mart seems to have attracted U.S. consumers not only with its reputation for low prices, but also with its wide selection, which allows customers to save fuel by making one big shopping trip at a Wal-Mart superstore rather than several trips to other stores.

“Consumers are worried, and they’re going to be looking for more ways to save money,” says Lyn White, a portfolio manager at Christiana Bank & Trust. “We’ve only started to see the beginning of the consumer shifting away from [more upscale rivals like] Target and the Gap (GPS),” she argues.