Wal-Mart's Strength

Wal-Mart (NYSE: WMT) continues to show considerable strength, despite signs of a worsening economy - or perhaps because of them. The discount giant's fourth-quarter net income increased 4 percent to $4 billion, while revenues increased 8 percent to $106 billion. International sales saw a whopping 19 percent gain.

Wal-Mart isn't downplaying the grim economic environment right now, although it does intend to capitalize on its price-cutting competitive advantage. In the company's statement, President and CEO Lee Scott said the economy remains "a critical factor" this year, and he acknowledged that consumers were watching their wallets in January. He also said that Wal-Mart plans to "continue to strengthen our price leadership around the world."

Times are tough for many consumers - even higher-income shoppers who might have boosted their spending with home equity loans - and Wal-Mart's certainly known for rock-bottom low prices. Of course, this type of environment favors low-cost rivals such as Target, too.

In the long run, Wal-Mart still has work to do. However, the company appears to be willing to evolve, given a changing consumer landscape. For right now, though, it's arguably most at home in a penny-pinching economic climate. After several years of economic largesse and consumer excess, the discount giant seems to be back in its element.