Office Depot Shares Surged: What You Need to Know


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Office Depot (NYS: ODP) shares leapt as high as 11% today, before falling back to close out the day just shy of a 10% gain.

So what: The only real OD-specific news out today is the company's move to close a distribution center in Lansing, Ill. Poor results out of Best Buy (NYS: BBY) , however, may be contributing to Office Depot's spike, on the theory that what's bad for a tech-retailing rival could be good for OD -- the more so when you recall that OD's back-to-school update last week wasn't nearly as bad as it might have been.

Now what: That said, my reservations about last week's surge remain in effect today. Analysts still see little chance Office Depot will break even this year. Next year's projected $0.13-per-share profit doesn't seem to justify the shares' price, especially not with long-term growth expectations still stuck at 10%.

The upshot: OD's still a strong sell.

Think Rich is wrong? Think Office Depot's price surge is justified? You could be right.Add it to your watchlistand find out.

At the time thisarticle was published Fool contributorRich Smithdoes not own (or short) shares of any company named above, but The Motley Fool owns shares of Best Buy.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has adisclosure policy.

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