Radio Shack has been in a very narrow trading range recently and the question is:
How bad can it goes???
It would be very difficult to understand that a company like that would have another very bad quarter after the last 2. That would mean that management is unable to fix the problem and return to the good old times profitability speaking.
The whole sector has been in a very difficult position for the last 12 months but we have to remember that this is a pure US play (including some stores in Puerto Rico) and their problems is to fix the competition problem.
Margins are lower, cell phones profitability is gone so they are left competing against all other electronic retailers including internet based discount sellers.
Radio Shack has established themselve as being the 'convenience store' in electronics and customer service was their best card toward the other players. Have they lost it?
I do not believe so and i also think that they have in their share price a good pourcentage removed due to investors being excessively nervous about retail in general.
When you look at some fundamentals their share price to book value is simply incredibly low: 0,35. This means that actual book value is about 7,60$ and that expectations from the market is another 50% cut in their overall value. I don't buy that.
We should also remember that at this price Radio Shack could be a target for a take over.
So at this level, i am in and will add to my existing position. My expected target price before year-end is 6$.
As usual DO NOT INVEST MORE THAN YOU CAN AFFORD TO LOSE and always do your own due diligence before investing in any stock. CHEAP SHARE PRICE does not necessary mean a real bargain. Play with extreme caution.
Get THE PLAY OF THE DAY on Twitter : @investman2
How bad can it goes???
It would be very difficult to understand that a company like that would have another very bad quarter after the last 2. That would mean that management is unable to fix the problem and return to the good old times profitability speaking.
The whole sector has been in a very difficult position for the last 12 months but we have to remember that this is a pure US play (including some stores in Puerto Rico) and their problems is to fix the competition problem.
Margins are lower, cell phones profitability is gone so they are left competing against all other electronic retailers including internet based discount sellers.
Radio Shack has established themselve as being the 'convenience store' in electronics and customer service was their best card toward the other players. Have they lost it?
I do not believe so and i also think that they have in their share price a good pourcentage removed due to investors being excessively nervous about retail in general.
When you look at some fundamentals their share price to book value is simply incredibly low: 0,35. This means that actual book value is about 7,60$ and that expectations from the market is another 50% cut in their overall value. I don't buy that.
We should also remember that at this price Radio Shack could be a target for a take over.
So at this level, i am in and will add to my existing position. My expected target price before year-end is 6$.
As usual DO NOT INVEST MORE THAN YOU CAN AFFORD TO LOSE and always do your own due diligence before investing in any stock. CHEAP SHARE PRICE does not necessary mean a real bargain. Play with extreme caution.
Get THE PLAY OF THE DAY on Twitter : @investman2
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