Obama Advisor Defends WalMart but I Buy Target

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Obama Advisor Defends WalMart but I Buy Target

Written by David Neubert

Thursday, 12 June 2008 10:55

Obama Advisor Defends WalMart but I Buy Target

Photo: drp, Creative Commons, Flickr
Liberals are criticizing Obama Economic Advisor Jason Furhman for his pro WalMart (WMT -$59.50) comments. USNews blogger James Pethokoukis thinks Jason Furhman may not last long with Obama but I hope he does. Furman is from the Brookings Institute and seems to be fairly centrist.

I do not currently hold WalMart shares. I sold WMT and bought Target (TGT - $52.61) because I find Target's growth story to be more compelling at the moment. According to First Call, at $59.50 WalMart has a forward P/E ratio of over 17 versus that of Target (TGT - $52.61) at under 15.

In terms of corporate behavior, Walmart is widely criticized for low wages and lack of health care benefits for many of its workers. However, if the country had a national health care system that covered everyone and was not the responsibility of employers, WalMart would be widely lauded by workers strictly for their low prices.

And although there are still many reasons to be critical of any corporation, WalMart management actually responds to criticism with policy changes and/or explanations. So I have a hard time making the retailer a poster child for what is wrong with corporate America. The fact is that they are trying to reform themselves.

Are they as good at Starbucks? Not yet, but they are trying.

In the meantime, I wouldn't buy WalMart unless it were to fall below $50 bucks a share. As for my Target position, I'm watching its slowing growth numbers carefully. I might have to bail out of that retailer as well.

Disclosure: I own Target. I do not own Walmart but have traded (and owned) it in the last two years. The photo above is from my 2006 trip to Burning Man. Walmart also lets people sleep in RVs in their parking lots.

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