(FORTUNE Magazine) – When Houston's Dennis Plato visits the giant new Wal-Mart near his home, he tries to stick to his shopping list. But he can't always help himself. For example, when he recently stopped in to buy groceries, he walked out with a $30 tree pruner too. "I wasn't planning on the pruner, but it was on sale," says Plato, sounding faintly apologetic. "They put the food in the back of the store so it's hard to get out without buying something else."

In tiny Palestine, Texas, 2 1/2 hours away from Houston, the story is the same. Pat Lewis Krisch, a single working mom with three kids, barely even goes into her local supermarket now that there's a new Wal-Mart supercenter nearby. These days she just tosses everything from toys and aspirin to steak, vegetables, and socks into one shopping cart.

Then there's Dennis Faulkner. The Cumming, Ga., native raises the retailer-customer relationship to a whole new level--the Wal-Mart date. First, Faulkner and his wife, Marilyn, have dinner at a nearby restaurant. Then they head to a new supercenter and spend several hours cruising the wide aisles and checking out the weekly specials. "I used to go to Wal-Mart once a month," says Faulkner, a 52-year-old computer systems specialist. "Now it's more like once a week. They've really suckered me in." Faulkner estimates that in the past few months he's dropped nearly three times as much money at Wal-Mart as at rivals like Kroger or Publix.

Don't snicker. The steak-and-spark-plug shoppers aren't the only ones coming back to Wal-Mart; close behind them are the pinstriped hordes of Wall Street. That's right: Wal-Mart is a hot stock again. After sitting out much of the great bull market of the 1990s, WMT shares have nearly doubled in the past year and now trade just below their all-time high. In the past three months alone the stock surged 20%, even as the Dow succumbed to the Asian peril.

What's changed? Earnings, first of all. After years of lackluster performance, the company's 3,400 stores are raking in profits, driven by strong growth at the new supercenters and sizable gains overseas. But Wal-Mart has also brought a bit of its Main Street marketing skills to bear on Wall Street.

"Wal-Mart people are far more accessible than they were just three years ago," notes J.P. Morgan analyst Mark Husson. "There's been a real change in attitude toward Wall Street, and it's made me a lot more comfortable with the stock." That's exactly what Wal-Mart CEO David Glass had in mind. In the past, Glass concedes, "we may not have been as attentive to Wall Street as we should have been. Now our financial people are doing a better job." The new glasnost has certainly worked on Husson. After rating Wal-Mart a hold for years, he upped the stock to a long-term buy last summer.

For Glass and other executives at the giant based in Bentonville, Ark., the turnaround is sweet vindication. Under legendary founder Sam Walton, the company grew staggeringly fast in the 1970s and 1980s. By the early 1990s it had become the nation's largest retailer, one of Wall Street's hottest stocks, and a fixture atop FORTUNE's list of most admired companies. People who put $1,000 into Wal-Mart when it went public in 1970 saw that investment grow to nearly $2 million by 1993. Walton became famous as the richest pickup-truck driver in America.

But after Mr. Sam's death in 1992, Wall Street began to worry that Wal-Mart's years as a fast grower were over. Analysts questioned the company's move into the low-margin food business and its new international expansion. Annual earnings growth declined sharply, from 24% in 1992 to near zero in 1995. For many investors the darkest moment came in early 1996 when Wal-Mart announced that for the first time in 100 quarters, earnings had actually fallen. A few months later, FORTUNE (April 29, 1996) asked, "Can Wal-Mart Get Back the Magic?"

Well, now we know. But the magic of today's Wal-Mart is quite a bit different from the alchemy practiced in Sam's day. Instead of earnings growth that frequently topped 25% in the rip-roaring '80s, today's Wal-Mart promises consistent profit increases in the 15% range. But with Asia's turmoil hanging over U.S. corporate profits like a noxious cloud, Wall Street is willing to ante up for a little consistency. In fact Wal-Mart--which draws over 90% of its sales from the U.S.--may be one of the few big stocks to benefit from the Asian eruption, as investors flee volatile exporters like Intel and Boeing for the relative stability of a giant retailer.

Wal-Mart's stock has also gotten a boost since management learned to play the Wall Street expectations game. In Sam Walton's time, Wal-Mart was growing so fast that it didn't actually need to court the Street. Walton went so far as to declare in his autobiography, "We couldn't care less about what is forecast or what the market says we ought to do." Walton's successors discovered that ignoring Wall Street can be painful, though, when the stock sank from above $30 in late 1992 to less than $20 in early 1996.

The company's relations with Wall Street were cordial in the 1980s, but during the mid-1990s, "the company frequently overpromised and underperformed," says analyst Don Spindel of A.G. Edwards. Now, Spindel says, Wal-Mart does exactly the opposite, and veteran retail analyst Walter Loeb adds, "Wal-Mart's relationship with Wall Street couldn't be better."

Indeed, the steps Wal-Mart has taken in the past two years read like a how-to guide for companies eager to get back in the good graces of Wall Street. For starters, Wal-Mart cut costs, holding expenses flat even as it pursued pricey expansion plans. In addition, the company reduced the dollar amount of inventory on hand by a cool billion in 1997. Management plans to trim it by another $500 million in 1998, Husson notes. Not only does this allow the company to devote less retail space to storing goods and more to selling them, it also frees up capital for more productive purposes. Taken together, Husson says, these developments helped the company's rate of return on investment to finally start rising in 1997 after a five-year downswing.

A major share-repurchase plan has also impressed Wall Street, says A.G. Edwards' Spindel. Big share buybacks have been popular with investors throughout the '90s bull market, providing a floor for stocks in down periods as well as a signal that execs think their company is undervalued. Wal-Mart came late to the party, but the company's decision last March to buy back roughly $2 billion in stock--the first major repurchase in the company's history--more than made up for it. Another crowd pleaser was Wal-Mart's 30% dividend increase, although earnings are growing less than half as fast.

Finally, there are the little, hard-to-quantify things that play a big role in the care and feeding of Wall Street. Like making executives more accessible. Or providing more detailed information about exactly how stores are doing. And making sure that stores look their best when Wall Streeters come to visit. One analyst says after he recently alerted the company that he was planning to tour an older facility with some big investors, Bentonville brass ordered a quick paint job to brighten the store before the entourage arrived.

This isn't to suggest that Wall Street has been dazzled by a Potemkin village, Arkansas-style. In fact the company's savvy sales job neatly dovetails some very real positives in Wal-Mart's operations. Besides the cost cuts and the leaner inventory structure, Wal-Mart has continued to build on the technological advantage it has had since Sam's day. Computers at every store track just how fast each item is selling, automatically alerting warehouses when supplies are running low. This allows employees to spend more time with customers, instead of scanning shelves and filling out order forms as they did in the past. All the new technology should help Wal-Mart continue to cut costs in coming years, says Glass. "I'd like us to be much more efficient than we are."

More than cost cuts or technology--or even Wall Street schmoozing--it's the supercenters that are likely to carry Wal-Mart into the next century. Over 100 new 180,000-square-foot emporiums are set to open this year, gradually replacing traditional 90,000-square-foot Wal-Mart stores. The older stores are still profitable, but they generate an average of $25 million a year in annual sales, Spindel estimates, compared with $65 million for a supercenter. By 2000, Husson says, supercenters should generate a total of $46 billion in revenues, up from $21 billion today.

The supercenters also give Wal-Mart a crucial entree into the $450 billion grocery business, which dwarfs the discount-store sector. The company is thinking about more than just customers' convenience here. People shop for food twice as often as they shop for goods. And if they buy their groceries at Wal-Mart, it's a good bet they'll also pick up higher-margin items like CDs, videos--even tree pruners. To be sure, Wal-Mart has plenty of work to do before it can dominate the grocery business the way it commands discount retailing. "Food is definitely a learning curve," Glass admits. "We're improving, but we're not as good in food as I wish we were," he adds, pointing out weaknesses like dull presentation. Even so, groceries are one of the reasons that supercenters are expected to generate nearly $2 billion in operating income in 1998, slightly less than 30% of total profits, according to Prudential's Wayne Hood. Not bad for a division that didn't earn a dime five years ago.

While supercenters provide growth on the domestic front, Wal-Mart has also been expanding successfully overseas. Going global is notoriously tricky in the retail industry, but Glass has finally been able to make real money abroad--$23 million in 1996, an estimated $165 million in 1997, and a projected $250 million in 1998. While overseas profits remain a small fraction of the company's anticipated $3.9 billion in total 1998 income, the rate of annual growth hearkens back to the glory days of the 1970s and 1980s.

Not surprisingly, many of the company's new fans on Wall Street are counting on continued success in Europe, the Americas, and even Asia. "Wal-Mart has a stark choice," warns Mark Husson. "It can become a large, cash-generating all-American company with all the excitement of a utility stock. Or it can go out and play with the big boys overseas." Glass doesn't see the future in such dramatic terms, but he insists the company is committed overseas. Over the next five years, Wal-Mart hopes to get one-third of its profit growth abroad. In 1998 alone, 50 to 60 new stores are set to open overseas.

Whether Wal-Mart's future growth lies in supercenters or international sales is certain to be a key question in the selection of the 62-year-old Glass's successor. The choice, to be made by the board and Rob Walton, Sam's eldest son and the chairman of Wal-Mart, will likely come down to two men--Bobby Martin and Lee Scott. A 19-year Wal-Mart veteran, Scott is a logistics expert who was recently named president of the company's domestic stores division. Martin, on the other hand, heads up Wal-Mart's international unit and has a strong following on Wall Street. "Both men are candidates," says Glass, quickly adding that Tom Coughlin, another domestic stores exec, and Mark Hansen, president of the Sam's Club division, are also in the running.

In the meantime, Glass can take comfort in the fact that Wal-Mart stock is once again making investors rich. And what would Sam think of today's Wal-Mart--more sensitive to Wall Street, more reliant on supercenters, and increasingly looking abroad? "He'd love it and recognize it," Glass declares. "All the basic principles are the same. He'd feel right at home."