Recent Sell: Wal-Mart Stores

ID-100266200-300x250 Recent Sell: Wal-Mart Stores

So this will be my third sell this year. I don’t tend to sell any company that I own because I hold for the long term. Only a few things warrant a sell in my book. The first one is if a company cuts its dividend. The second if the stock is in my view extremely overvalued. The last reason is if there is some kind of fraud in the books.

With this sell, I sold because I felt that the stock is very overvalued.

I completely sold out of my position of Wal-Mart Stores (WMT)

16 shares @ $98.15

 

 

My Thoughts:

I first bought WalMart on September 5th, 2013 for $72.85 a share. There were a lot of opportunities to buy more shares of WMT at a lower valuation, but I did not buy because I saw a better opportunity to buy other companies at the time.

Currently, WMT has a PE of 26.1 and its 5-year average is 15.0. This is a great sign that tells us that WMT is overvalued. Even though, analytes expect that earning are going to grow at 10% in the next three years.

WMT dividend payout ratios is 54%. With earnings expected to grow at 10% and a relatively low payout ratio, I expect dividend growth in the mid-single-digit going forward. I would definitely look getting into WMT again once valuation is reasonable.

I came up with a fair price of $86.93. This means that WMT is 13% overvalued.

WalMart is Highly overvalued and I recommend it as a Sell at this time.

wmt Recent Sell: Wal-Mart Stores

Source: Fastgraphs.com

With the money from this sell, I added to a position that I find to be undervalued. This company that I bought has a higher dividend yield as well as double-digit dividend growth potential. Make sure that you follow me to find out where I put my money into.

Thanks for reading and don’t forget to follow me!

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Comments

  1. Excellent analysis. A lot of folks are recommending Walmart as a long-term dividend buy, so it’s interesting that you decided to sell. What is your investing time horizon?

    I agree about the overvaluation issues. I’m seeing that across the board as I look for new stocks to add to my dividend portfolio, or think about adding to existing positions. I actually decided not to start a position into Walmart because it is overvalued right now.

    What stock did you buy to replace Walmart?

    • Hi DividendFIREman,

      Thanks for the kind words. I agree I see a lot of people recommending WMT as a buy right now. I disagree that it is a buy. It is either a hold or a sell.

      I am 33 years old and plan to retire early in 5-7 years, but I plan to continue to invest until I die.

      I am having the same trouble finding good investment ideas. I bought HBI. Look into it. It is very cheap right now. Thanks for commenting and please come back again.

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