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About.com’s Kimberly Amadeo discusses how the big-box retailer is benefitting from a tough economy.
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You know one of the big things lately it's been Wal-Mart this shares hit an all time high so the question bags.
Our consumers flocking to the discount retailer because of a threat of recession.
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- You know -- -- it when these discounters particularly Wal-Mart does -- what does that say about the overall economy.
Well I think Charles and by the way I'm delighted to be here.
I think that it really talked about two trends.
That art can come up since the recession and because of the recession.
One stranded the main street trend and the other one is a Wall Street trend and the main streets and is Wal-Mart understands.
The shift a threat that customers want value in addition to low price.
So of course that Wal-Mart is the low price leader there's no question but it also provides value.
For example they have a pay with cash program.
Which let their customers many of home can't get credit cards.
Go online do their shopping and use the convenience of online and pay with cash within two days.
So -- second.
OK guys -- -- -- -- secondly I I you know I agree with you I mean Wal-Mart is really Smart I think recently I saw a commercial where you can actually take your check here.
And cash it for free you know a lot of people don't realize being Ford's very expensive one of the expenses is just get -- check -- so.
There's little doubt that -- obviously pretty Smart about this but also.
Other discounters Kohl's and target they haven't done as well -- things like people really.
Our our -- for the deep discounts as well as good service.
Right and they they require both these days people don't want just low price they're willing take travel farther and even sometimes pay a little more if they feel like they're getting a good value.
The second reason is a Wall Street resent.
And it's the flight to safety the flight to safety which recently drove the treasury ten year treasury yield down to a 200 year lull.
For those investors -- are willing to take a little more risk and one slightly return a higher return.
They're looking for dividends.
And then Wal-Mart does pay at 2.3 percent dividend -- driven by strong cash flow.
-- in addition it has a PE ratio dropped fifteen point three which is better than the S&P 500 it would.
Wanna get to PE ratios as much as the idea at any minute 2% dividend Ellison night.
There's maybe a zillion billion companies out there utilities were higher dividend that.
I mean really I I I I gambling that this is more an economic story -- got to believe this is also reports and I gotta tell you individuals out there aren't necessarily known for -- timing the stock market.
But when it comes a household finances and what's gone on in the economy.
They seem to do the right thing so much faster than the federal government doesn't right now to me it seems like they know it's time to hunker down.
In May be prepare for some of the dark clouds that they don't understand per say but intuitively they know something is wrong when our economy.
Well and I think people the word I think -- -- instead of confidence.
People are feeding feeling cautious and that applies to consumers and applies to businesses that applies to investors.
And that's why you have the flight to safety on -- street which is propping up.
Wal mart's prices you know there are seen as a solid low cost leader they have a very strong competitive advantage it's very clear and I think you'll find that companies.
No matter what market area and if they have a strong clear understandable competitive advantage.
They're going to do well mean that I wanted to have a little success of apple you're absolutely apple is not Apple's not low cost but they're doing extremely well because they're a differentiated right.
All right well -- apples and out liar but I think Wal-Mart is something that almost all our viewers understand Kimberly has been a pleasure having on the show appreciate it.
Thank you so my.
