Super Bowl 'Smash-It-Up' Trades

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Super Bowl Trade I: Buy Wal-Mart (WMT)

Consumers rollback spending and WMT wins

By Nick Atkeson and Andrew Houghton

With the weakest economy, we've never been more inclined to stay at home to watch the big game.  Watching the Super Bowl at home is essentially free, but grabbing all those party supplies for your hungry, stay-too-long friends isn't.

What is a fan to do?  Go to Wal-Mart (WMT) to get those party supplies at the best possible price.

Wal-Mart started the year with a disappointing earnings and guidance report on Jan. 8, and its shares are on sale, like many items in its stores. The stock is down this year from about $58 per share to about $48.

Despite having pulled back almost 20%, the company continues to grow earnings.  Trading at about a 14 P/E, earnings are expected to be $3.35 for this fiscal year ending January and $3.59 for next year.

The trends are in Wal-Mart's favor.  Management has done an excellent job of refocusing the company on fundamentals. And as shoppers watch every penny, they will spend more of their disposable income at discount retail stores rather than high-end retailers

Buy Wal-Mart (WMT).  For those experienced option traders, we recommend selling the WMT Feb 47.50 Puts (WMTNW) for $1.65 or better.

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Next: Super Bowl Trade II