Investors might have underestimated Wal-Mart Stores Inc's prospects once economic recovery begins, but the retailer's management is buying the stock because it knows it is trading at a bargain, Barron's reported on Sunday.

Wal-Mart bought 19.2 million of its own shares in the latest quarter and has $4 billion left in its buyback plan, Barron's said.

The newspaper said in its May 18 edition that Wal-Mart has faith in itself at a time when few others do, noting that the stock is down 14 percent at $48.15 and has been trading essentially flat since March 9. This is happening even as the S&P retail index has climbed 41 percent on heavy volume, Barron's said.

Wal-Mart's earnings last week reflected weak overseas revenue and a strong dollar, even as U.S. sales rose, Barron's said, adding that new customers drove 17 percent of increased visits and spent 40 percent more than regular customers.

Barron's also said a second quarter swelled with people spending money that they received in rebate checks will set up tough comparisons later.

That helps explain why Wal-Mart's shares are retreating to trade at 13.4 times forward earnings even as free cash flow and book value reach their highest levels in at least a decade, Barron's said.

(Reporting by Robert MacMillan, Editing by Maureen Bavdek)