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Tickers in this Article: SPLS, OMX, ODP, WMT
As the U.S. economy expands, stores that sell office supplies, computers and office related equipment should be seeing plenty of foot traffic. But here are some reasons why a bet on the traditional office supply retailers may not be the smartest move at this time.

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Time to Collate and Staple
Longer-term the office supply retailers, the major ones, seem like they are in a generally good position. After all, as small and big businesses grow they are likely to need to replenish supplies and all of the little gadgets that typically adorn offices. However, the road to recovery could be quite bumpy, and the earnings of these stores could be too.

The office supply retail chains aren't a terrific value at this point. For example, Office Depot (NYSE:ODP) is expected to lose eigh cents per share this year. Down the line, this company can possibly shine, but right now, what is expected on the bottom line isn't all that compelling given that the stock trades at more than $5.

Office Max (NYSE:OMX) trades in somewhat close proximity to its 52-week highs and is certainly a good name in the space. However, it trades at more than 19.6 times this year's estimate. That seems a little rich a price to pay given the recent action in this market.

Staples (Nasdaq:SPLS) seems like a bit of a better deal as it is expected to earn $1.33 per share this year and it trades at roughly 16.1 times this year's estimate. Staples made headlines recently after it disseminated better-than-expected first quarter earnings results.

However, that isn't overly compelling because one could hypothetically buy a security like discount and bellwether Wal-Mart (NYSE:WMT), which sells large amounts of items that can be found in your typical office for 12.8 times this year's estimate.

The Wal-Mart Play
Wal-Mart has some other advantages too. Not only does it sell office equipment, but it also sells a multitude of other necessities, which should do well during tough times and good times. I'd rather go with a company with a diverse inventory and one that has very deep pockets and huge pull with suppliers.

The Bottom Line
Office supply retailers do have the potential to do well over time, but right now their valuations aren't overly compelling. All things considered, Wal-Mart seems like a much smarter play at this point given its vast merchandise selection and deep pockets among other reasons. (Read Analyzing Retail Stocks to learn about the most important metrics to look at when analyzing retail stocks.)

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