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Will Wal-Mart Return to Roots as a Cost-Cutter?

Wal-Mart, the top performing Dow Jones Industrial Average member during the credit crisis of 2008, is ready to reclaim that lead as it aggressively renews the price-cutting ways that turned the Bentonville-Arkansas store into the largest retailer in the world, according to a top retail analyst.

After climbing more than 10 percent in 2008 as the rest of the market plummeted, the shares fell 3 percent in 2009 (compared to a 28 percent gain in the S&P 500 ) as investors fled recession safe havens and returned to retailers that benefit from a healthier consumer.

“Wal-Mart is lacing up the gloves in the fight to win the modern day price war in food retail in 2010,” wrote Deborah Weinswig, Citigroup Global Markets analyst, in a note to clients this morning. Weinswig, the No. 1 broadline retail analyst according to Institutional Investor magazine, upgraded the shares to buy and predicted a 20 percent increase over the next 12 months.

Wal-Mart shares jumped nearly 3 percent today for the best performance in the Dow. Grocery competitors including Target and Krogerfell.

Wal-Mart lost customers last year that it had gained during the recession by spending more money on transforming the look of its stores and adding more technology. Meanwhile, supermarkets put their focus back on cutting prices.

“We believe shoppers no longer consider the price savings offered by Wal-Mart to outweigh the experience and convenience of shopping at the supermarkets,” wrote Weinswig. “Wal-Mart realizes that it must act now to keep the customer.”

While investors cheered this potential move by Wal-Mart, another Dow Average underperformer of the last 12 months continued to dig a deeper hole for itself. Exxon Mobil said at its analyst day last week that it would keep its annual capital spending above $25 billion the next four years. Investors have been clamoring for Exxon to return more cash to shareholders through buybacks or dividends, rather than new projects or takeovers. Exxon shares are down more than three percent this year.

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Trader disclosure: On March 15, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM); Finerman Owns (AAPL); Finerman's Firm Owns (BAC), (BAC) Leaps; Finerman Owns (BAC), (BAC) Preferred; Finerman's Firm And Finerman Own (GOOG); Finerman's Firm And Finerman Own (JPM); Finemran's Firm Owns (WFC) Preferred; Finerman's Firm Owns (BSX), (OSIP), (TGT), (WMT); Finerman's Firm Owns (KFT); Kelly Owns (AMZN) Calls; Kelly Owns (ELX) Calls; Seymour Owns (BX), (EEM), (FXI), (MSFT), (XOM), (AAPL), (BAC), (GE), (F); Jon Najarian Owns (FCX), Is Short (FCX) Calls; Jon Najarian Owns (MSFT), Is Short (MSFT) Calls; Jon Najarian Owns (TGT), Is Short (TGT) Calls; Jon Najarian Owns (WMT), Is Short (WMT) Calls; Jon Najarian Is Short (GOOG) Through Put Spreads; Jon Najarian Owns (GS), Is Short (GS) Calls; Jon Najarian Owns (C), Is Short (C) Calls; Karabell Owns (FCX), (NKE), (GOOG), (FXI), (C); Nations Owns (MSFT), (SPY)

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