Wal-Mart CEO on inflation

Disclosure: I may or may not own any of the securities mentioned and am not an investment advisor. Please do your own due diligence before investing in any securities mentioned.

Target (TGT)

I actually bought this one in the Benjanomics virtual portfolio last week, but didn't get around to writing about it until now. Luckily, Target has held steady and the trade can still be had for a good price.

I have previously written about two other retail stocks, Kohls and Wal Mart. While I am hesitant to own so much retail in one portfolio, I am comfortable owning these and think that they offer good value to any investor's portfolio.

I personally shop at Target quite often. Being in Atlanta, you are either ITP (inside 285) or OTP (outside 285). Since I am ITP and their are more Targets ITP, I go to Target more often. Also, I think the stores are laid out better and aren't as overwhelming as Wal-Mart. And recently, for the first time in four years, Target actually has lower prices than Wal-Mart. Another thing working in Targets favor is that it will be selling the gadget of the year, the iPad 2! Target currently sells at a PE of 12.91 and has a forward PE of 10.99. So here is the buy-write:

Buy 100 TGT at $51.64:                (5,164)
Sell 1 Jan 12 52.5 Call @4.00:          400
Sell 1 Jan 12 52.5 Put @5.50:           550
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Total outlay:                                  (4,214)

Total Return: $1,096 on a stock that need to rise by .36 over the next 9 months.

Break Even: $47ish

And to all the people that say "but gas prices are rising and they are going to kill retail!" I say ride the Marta bus.

Disclosure: I may or may not own any of the securities mentioned and am not an investment advisor. Please do your own due diligence before investing in any securities mentioned.

Wal Mart (WMT) raises dividend 21%

I've previously written about WMT here. Today they announced a raise in dividend of 21% to $1.46/share.

http://finance.yahoo.com/news/Walmart-Increases-Annual-bw-1581713540.html?x=0&.v=1

The most boring 30ish% return of all time

Wal Mart is one of the most boring stocks ever. It basically just hangs out in the $45-55 range. Even during the financial crisis, Wal Mart only went down to $43/share. The people of Wal Mart, on the other hand, are always exciting. Other stocks have rebounded 100-500% off their lows of the financial crisis, but boring old Wal Mart is only up 27% from its lows. I don't expect it to go much higher anytime soon. Neither do most people, as JP Morgan downgraded the stock because they see low income people leaving Wal mart for cheaper discount stores and other shoppers ditching wal mart for pricier retailers. However, Wal Mart is the largest retailer in the US, is expanding in emerging markets rapidly, and sports a healthy 2.2% dividend yield. Shares might suffer in the near-term, but with a few changes in the next 22 months, hopefully Wal-Mart will rocket to $55.01 and make this buy-write return almost 30%.

Buy 100 WMT @54.80                    $(5,480)
Sell 1 WMT Jan 13 $55 Call                $505
Sell 1 WMT Jan 13 $55 Put                 $640
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Total outlay:                                    $4,335

Potential return: $1,407 including dividends or 32% return on cash invested on a stock that needs to increase <1% in the next 22 mos.

Break-even: 49.18 or 10% below current prices