Wal-Mart Stock May Face Resistance at $60

But while Wal-Mart looked dated during the giddy days of housing wealth and easy credit, now its homely stores and everyday low prices are making sense again. The shares are up 23% so far this year, making it among the Dow's best performers, and it's winning props for holding up amid these tough retailing times. With fundamentals better and international business growing, some analysts say Wal-Mart's stock could finally break out again.

Investors, though, may be wondering if this isn't deja vu. In the 1990s, Wal-Mart's stock stumbled for much of that decade, even falling into the single digits for a time, before sprinting way ahead after a turnaround that pushed the shares past $60, adjusted for splits, by the end of 1999. Unfortunately the stock hit another wall and the shares have spent most of the 2000s trapped in a range between the mid-$40s and $60. Now, Wal-Mart is again coming off a late-decade turnaround and the stock is finding new traction. The question is if this run has any legs.

Getting over the $60 threshold won't be easy. Wal-Mart is already trading at a premium to the broader market at 17 times its estimated earnings for the year. Factor in modest future growth, forecast at 12%, and the stock is at a 21% premium to the S&P 500, according to Thomson Financial.

Some premium is warranted since Wal-Mart is generally a safe investment that pays a dividend and has defensive characteristics as a discount retailer of consumer staples.