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Bargain to be had in Wal-Mart shares
Date: Friday, March 30 2007
Topic:


Bargain to be had in Wal-Mart shares
Retailer's aggressive strategy, struggling stock price strike analysts as potential buy
SHIRLEY WON

Like the prices of its merchandise, shares of Wal-Mart Stores Inc. have seen a "rollback" in recent years.

But some analysts see a bargain in its shares now that the world's largest retailer has embarked on an aggressive strategy to boost sales, cut costs and expand globally.

Wal-Mart shares, which hit a high of $63.75 (U.S.) in March, 2002, ended yesterday at $47.49 on the New York Stock Exchange. The stock has struggled to climb higher from a low of $42.49 in 2005.

The Bentonville, Ark.-based retailer, which posts annual sales of nearly $350-billion, has been expanding in regions like Mexico, Latin America and also Canada, where it will open 21 more Supercentre stores this year.

"There are reasons to be optimistic" judging by their U.S. initiatives, Sarah Henry, an analyst with MFC Global Investment Management, said in an interview.

Wal-Mart is cutting costs by keeping inventory low, and is now trying to drive more traffic to its stores by selling many generic drugs for $4, said Ms. Henry, who bought 200,000 Wal-Mart shares over the past six months for the Sovereign Investors Fund.

The retailer has also embarked on a public relations campaign to counter attacks in the press from politicians who want to keep Wal-Mart out of their community to protect local shopkeepers, and union leaders critical of their low-wage model, Ms. Henry added.

"In the past, they have ignored that sort of thing.

"But they need the goodwill to enable them to open stores. . . . The new goal is to open in urban areas."

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