Categories: Alpha Algorithm HotlinesStock Market News

Alpha Algorithm Piles into a Global Retailer

This week’s Alpha Algorithm recommendation is a position that made an appearance in several new strategies this week. Like many other dividend-paying blue chips, Wal-Mart Stores Inc. (WMT) has outperformed the broader S&P 500 by a wide margin, making a particularly strong move to the upside in mid-May.

Founded in 1945 and headquartered in Bentonville, Arkansas, Wal-Mart Stores, Inc. operates retail stores in three segments: Walmart U.S., Walmart International and Sam’s Club. As of January 31, 2016, it operated 11,865 stores under 63 banners in 28 countries and e-commerce websites in 11 countries.

Wal-Mart versus the S&P 500 Year to Date

Seven Top Investment Strategies Betting on Wal-Mart Stores Inc. (WMT)

Float Shrink

The company has reduced its shares outstanding over the prior 120 days while meeting criteria for shareholder friendliness, profitability measured by free cash flow and leverage ratio.

Fundamental Strength

It is a top U.S. stock based on fundamentals measured by book value, cash flow, sales and dividends.

Dividend Aristocrat

The stock is among those in the S&P 500 that have increased dividends for at least 25 consecutive years.

Dividend Dog

It is one of the five highest-yielding stocks among each of the 10 sectors tracked in the S&P 500.

High and Steady Dividend

The stock is one of 50 dividend-paying companies from the S&P 1,500 Composite Index that has increased dividends for at least 20 consecutive years.

Small-Cap/Value Tilt

The stock was selected using a multi-factor modeling approach. It is a smaller-cap or value stock designed to enhance portfolio risk/return characteristics.

Broker’s Best

One of Raymond James’ selection of stocks expected to outperform the S&P 500 over either a six- or 12-month period.

Recommendation

Buy Wal-Mart Stores Inc. (WMT) at market today. Place your initial stop at $64.50.

Options

Since I tend only to recommend options when the stock has pulled back in the midst of an uptrend, I am holding off on recommending options this week.

Portfolio Update

With AbbVie (ABBV) pulling back and recovering slightly yesterday, I recommend that you buy the August $60 call options (ABBV160819C00060000), which last traded at $3.06 and expire on Aug. 19, to profit from this move.

Many of your other positions are currently technically oversold and due for a bounce. I would expect there to be a strong rebound once the uncertainty surrounding the United Kingdom’s vote to leave the European Union is resolved by next Friday.

Sincerely,

Nicholas A. Vardy

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world. He was the Editor of The Global Guru, a free weekly e-newsletter, and also edited the trading services Momentum Trader Alert, which focused on making short-term profits in the hottest markets in the world, and The Alpha Algorithm, which was designed specifically to deliver big, fast triple-digit winners, month after month. He was also the editor of Smart Money Masters, a monthly service focused on longer term investments recommended by the brightest minds in the business. Mr. Vardy has been a regular commentator on CNN International and the Fox Business Network. He has also published articles in The New Republic, The World and I, and The Baker & McKenzie Legal Review. The Global Guru/Nicholas Vardy has been cited in The Wall Street Journal, Newsweek, Fox Business News, CBS MarketWatch, Yahoo! Finance, and MSN Money Central. Mr. Vardy graduated from Stanford with a B.A. — with honors and distinction — in both Economics and History, and he also earned an M.A in Modern European Intellectual History. After winning a Fulbright Scholarship, he earned a J.D. degree at Harvard Law School where he was an editor of the Harvard International Law Journal. When not uncovering investment opportunities for his subscribers and investors, Mr. Vardy is a keep-fit enthusiast and an avid student of classical music.