1-Star Stocks Poised to Plunge: Sears Holdings?
Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, broadline retailer Sears Holdings (NAS: SHLD) has received the dreaded one-star ranking.
With that in mind, let's take a closer look at Sears' business and see what CAPS investors are saying about the stock right now.
Sears facts
Headquarters (Founded) | Hoffman Estates, Ill. (1899) |
Market Cap | $5.62 billion |
Industry | Department stores |
Trailing-12-Month Revenue | $42.86 billion |
Management | Chairman Edward Lampert President/CEO Louis D'Ambrosio |
Return on Equity (Average, Past 3 Years) | 0.6% |
Cash/Debt | $658 million / $3.74 billion |
Competitors | Amazon.com (NAS: AMZN) Target (NYS: TGT) Wal-Mart (NYS: WMT) |
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 30% of the 2,134 members who have rated Sears believe the stock will underperform the S&P 500 going forward. These bears include mpagnotta and fellow Fool Rich Duprey (TMFCop), who is ranked in the top 15% of our community.
Earlier this summer, mpagnotta offered a common-sense case against the stock:
As retail investors we have one major advantage: first hand experience with products. Have you been into Sears recently? The store is completely empty not to mention its absolutely boring and crappy looking.
In fact, Sears' paltry three-year average return on equity of 0.6% is substantially lower than that of rivals like Amazon (21.1%), Target (17.5%), and Wal-Mart (22%).
Rich expands on the outperform argument:
Seriously? Lampert thinks Sears is like Apple and Microsoft? He hires a tech guy from Avaya and IBM to lead the company? This company has more problems than I gave it credit for.
Here's just a taste of the delusion that's taken hold at the retailer:
"Like Apple, we seek to do so by improving our operating performance, innovating, and delighting customers."
http://www.searsholdings.com/invest/
Despite all the vaunted talk about Lampert finally investing more money in his stores, he's only put in around $400 million in the past year. Wal-Mart added billions. Sure it's got more stores, but even J.C. Penney with a smaller footprint spent more.
What do you think about Sears, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!
Interested in another easy way to track Sears?Add it to your watchlist.
At the time thisarticle was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Amazon, Wal-Mart, Apple, and Microsoft, as well as creating a diagonal call position in Wal-Mart and a bull call spread position in Apple. The Motley Fool owns shares of Wal-Mart, Apple, Microsoft, and IBM.Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.
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