1 Value Trap You Need to Avoid

RadioShack (NYS: RSH) is a perpetual value trap for investors. The company trades for a discount to net current assets, and has a lot of things going right -- on paper. Despite a large cash balance and store count, though, RadioShack has uninspring growth prospects for the future. The move to mobile sounds sensible in theory, but it comes with narrow margins and fierce competitors.

One reason for RadioShack's difficulties is the necessary evil of carrying Apple's (NAS: AAPL) iPhone. But what's crushed many mobile companies' margins has meant huge cash flows for the world's largest tech company.

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Editor's Note: A prior version of this article incorrectly stated RadioShack was a net-net. The Fool regrets the error.

The article 1 Value Trap You Need to Avoid originally appeared on Fool.com.

Austin Smith owns shares of Apple. The Motley Fool owns shares of Apple and RadioShack. Motley Fool newsletter services recommend Apple. Try any of our Foolish newsletter services free for 30 days. 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 a disclosure policy.

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