Amid the stock market turmoil last week, an interesting event took place in the market’s valuation of sustainability. If I were shopping for corporations, on Friday, I could have purchased one share of either Whole Foods Market or Walmart for $43.40. and today, I could have purchased either for $46.00. And if I had wanted to put a little hard-earned cash into owning a company in the crossfire of the green debate, what exactly would I have received for a little less than the cost of filling up a twenty-gallon tank of gas, or a reasonably priced dinner for two?
With Whole Foods, $46 could have bought me 1/140,000,000th of a growing organic grocer run by a libertarian vegan, bringing healthy food to people all over the country, and soon, perhaps, the world, while providing a delightful culinary shopping experience for soccer moms everywhere, spreading the good word on how to eat, and quite possibly reshaping commercial agriculture as it grows.
My $46 in Whole Foods could have bought just about $43 dollars in sales, and $1.32
in profits last year, with perhaps $3-3.60 in profits by 2010. My share ownership in Whole Foods will pay around sixty cents in cash per year, and would probably be diluted from 1/140millionth to 1/150millionth or so over the next few years, unless the Libertarian Vegan Executive Officer decides he wants his 1.1 million shares to grow in ownership and value more than he wants to issue shares to expand his empire.
My $46 in Walmart would have bought 1/4,070,000,000th of the largest retailer in the world, which, among a plethora of evils, reportedly treats employees fairly badly in its quest to keep overhead costs down, creates global sweatshops, and sells just about everything you need except love, assuming you don’t need artisan butter made from organically fed Buddhist Yaks in Tibet (19.99/lb.) Walmart is quite possibly shaking up large global processes such as packaging, trucking, manufacturing, adding water to products, and cutting down on trash and electricity. At least under current leadership, the mega-retailer is attempting to transform these vast and complex processes toward the greater green good, while still providing everyday low prices.
That four billionth or so of Walmart represents about $86 dollars in sales, and $2.99 in profits last year, which will probably grow to around $4.50 by 2010, and by then my ownership should grow to represent a whopping 3.6 billionth of a big “sell everything” retailer by then (Walmart buys its stock.) Walmart would also pay me 65 cents per share in cold hard cash each year, (which it actually funds from the business, while Whole Foods sells stock to fund its cash payout, essentially robbing Peter to pay Paul (and John and Deborah.) Like Whole Foods, Walmart will probably pay a higher dividend in the future, though ownership decreases for owners in stock-selling companies such as Whole Foods.
I bring this pricing coincidence up to ponder this: assuming I wanted to invest toward a sustainable future in a company that started with the letter “W”, which giant company is a better choice for my $46, or would I be better off tossing in another $4 and getting a small bag of pot and playing Halo 3 for a night with some friends?
Needless to say, Whole foods is the more Politically Correct choice, as many sentient beings would rather fund a war than Walmart, yet this is exactly what drives the market to offer Walmart so much more cheaply than Whole Foods. Markets are a collection of beliefs, and one common belief is that Walmart is evil.
Today’s Market Question, where is a better place for your “improve the world” dollars?
In the left corner, six billion dollar Whole Foods Market, the expensive healthy grocer, with expensive shares, lots of room to grow, providing lots of delicacies that we just couldn’t buy in small cities in the U.S. ten years ago.
In the right corner, the 175 billion dollar Walmart, a mega-retailer that might possibly sell kitchen sinks, but who has actually been through every aisle?
On the left, Whole Foods has helped create a global market in healthy and organic food, is helping to change the ways people think about eating and sourcing their food, and forcing grocers everywhere to carry organic soymilk and cow’s milk among other staples for their customers who read labels and question some things they see on television.
On the right, Walmart, which according to some, Bin Laden has it wrong, and Walmart is the great evil, not the U.S.A. Nevertheless, greenwash or not, Walmart is playing a key role in transforming global packaging, semi-truck fleet mileage, and supply chain carbon analysis. Both companies pack future value and are helping shape the future that we all need, assuming capitalism is part of that future.
Which is the better green $46 spent?
For the record, my money is on both.