Ahead of the holidays, investors have driven Wal-Mart Stores Inc. (NYSE: WMT) shares up by 15% this year to $69.99. That is some measurement of expectations that the retailer will do well during the most important part of the year for retailers.
Interestingly, the increase in Wal-Mart’s share price this year is almost identical to that of rival Amazon.com Inc. (NASDAQ: AMZN), which many people who have given up on the brick-and-mortar stores might find surprising.
Wal-Mart still has a number of advantages over other retailers, even Amazon. Its international operations, while not always successful, balance risk of sales downturns in Wal-Mart’s home market. The company continues to expand into promising markets, particularly China. Its business in Mexico is thriving.
Wal-Mart also has Sam’s Club, a bet on small business owners that has turned into one of the largest suppliers of this group of customers.
And Wal-Mart continues to press into Amazon’s territory with upgrades to Walmart.com, the buyout of online retailer Jet.com, and wrinkles that include allowing customers to buy online and pick up in stores. Amazon cannot match that.
Finally, there is Wal-Mart’s size. Not only does it have 5,200 stores, but the leverage to buy products in bulk to keep the prices of merchandise low. The company has indicated it means to win on price over this holiday. With its muscle with suppliers, it can afford to do that.
Wal-Mart shares may close even higher by the end of this year.