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Is Buffett Wrong on Wal-Mart? Analysts Take Sides

Can one really disagree with Warren Buffett's investment strategy? Yes. Dana Telsey, Chief Research Officer and Retail Analyst at Telsey Advisory Group, says the Berkshire Hathaway chairman is wrong when it comes to favoring Wal-Mart Stores. Jon Ogg, editor at 24/7 Wall St., defended Buffett's view -- and the analysts took their pro and con arguments to "Morning Call" viewers.

Buffett has championed Wal-Mart's profitability; but, Telsey said, "We happen to like Target." She told CNBC's Mark Haines that she believes the latter discount chain, with $6 billion in sales and 1,500 stores, can grow to 2,000 stores, generating "nearly $100 billion" in sales. Why does Telsey break with the Oracle of Omaha on this? She praised Target's "continuous product innovation," progressive management team and more consistent same-store sales.

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For all of Wal-Mart's gigantic success, she says the world's No. 1 retailer seems "big for the sake of being big" -- with nowhere else to go in the foreseeable future -- and may be making a large mistake in backing off from the affordable fashionability that's brought success to Target.

But Ogg said Buffett is on the right track. He conceded that "there's a reason" Wal-Mart is cheap -- and that it's "very difficult" to defend the chain on a relative basis. But, he manitained, long-term valuation "makes Wal-mart a better buy." And Ogg pointed out that he's "operating under the assumption that [CEO] Lee Scott is probably gone."