Wal-Mart has Built a Massive Decade-long Base
- Posted by JC Parets
- on November 15th, 2011
Wal-Mart Stores missed Wall Street’s expectations Tuesday morning. The excuse around the media today is that the economy continues to weigh on US customers. They still earned $3.34 billion in the third quarter and Net sales rose to $109.5 billion. Those are serious numbers.
The reason for the post is not to go over P/E ratios or PEG ratios or Book Values. Wal-Mart, my friends, has been building a massive base over the last decade. We laugh at this stock sometimes because it literally does nothing. You could sit tight in it, forget you own it, and collect that 2.5% dividend all day long – if that’s your objective. But if we take a step back for a minute, we can see the tremendous potential that this stock could have at some point in the near future.
The saying goes, “The bigger the base, the higher in space”. Ladies and Gentlemen, this is a serious base. We would obviously need to see a breakout above 65 (or 70 to be sure) before we get all excited. But the beauty of this trade is that we don’t have to be the first ones in. We’ll leave that to other people. But if and when this stock breaks out, the base that has been built since 1999 sets this stock up for a long long term uptrend. If you miss out on the first 5-10 points, it is not a big deal at all.
This is NOT a short-term trade. In fact, this isn’t a trade at all. I have no position and I don’t plan on initiating one any time soon. The point of this is to show this decade+ long base. The potential is there. Watch it and don’t forget about this one. I’m sure we’ll circle back to this at some point early 2012.
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J.C. Parets is the Founder & President of Eagle Bay Capital, LLC. He earned the Chartered Market Technician designation (CMT) in 2008 and now actively manages money incorporating Technical Analysis and Behavioral Finance into his practice More
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