KM buying WMT back on retail weakness after selling higher last week. We like WMT over all three of Hedgeye’s risk management durations for the following reasons…
1) US business is inflecting after years of investing to turn the cruise ship. This is partially apparent in WMT outperforming peers this holiday -- in part due to layaway plan, but also due to better alignment outside of consumables.
2) Great play on stronger dollar heading into 2012.
3) Street estimates are low next year by 3-4%. Not huge, but meaningful for WMT.
4) Though not really 'new' is share repo is a part of many investors' thesis, the fact is that the Walton Family is slowly but surely taking the company private.
5) Sentiment (per our backtested indicator) has never been worse.