[JTrout]

"China is now at the forefront of Wal-Mart's foreign store-opening program. Just 32 stores started up in that huge country since 2000, but sq. footage there is slated to increase by 30%- 50% in both fiscal 2005 and 2006. Wal-Mart's goal is to expand from 46 units in 22 cities, at present, to most local markets over the next 10 yrs., which implies a store count of at least 400 in China by then."

"The co. is making headway in penetrating domestic urban markets."


From S&P stock research:

Investment Rationale/Risk September 01, 2005

We have a strong buy recommendation on the shares. We believe WMT will remain well positioned to increase its U.S. market share, due to continued low price leadership, an expanding merchandise assortment with improving quality, and strong square footage growth. An improving economic environment coupled with strong store expansion plans should provide WMT with an opportunity to better leverage operating expenses. These factors bode well, in our opinion, for a return to more robust sales and earnings growth over the next few years.

Risks to our recommendation and target price include economic pressures such as rising unemployment or lower consumer confidence, which would negatively affect WMT's core customers and the company's results.

Our 12-month target price of $56 is derived from a blend of our analysis of relative P/E ratios as well as our discounted cash flow (DCF) model. Our DCF model suggests an intrinsic value of $56 to $60 per share and assumes a weighted average cost of capital of 9.0% and a terminal growth rate of 3.0%. We believe the shares should trade at a 15% premium to the S&P 500 on a P/E basis, reflecting the company's leadership position and our projection of an acceleration in comparable store sales growth in FY 06. Applying a P/E of 17.7X to our FY 07 EPS estimate of $3.05 implies a share price of $54.