Maybe he's been back and I've just missed it, but money manager John Dorfman appears to be writing a column on Bloomberg again. He stopped sometime back and I missed him -- he writes stock-picking columns and that, obviously, is most interesting to me. And left a void in Bloomberg's otherwise fine (and underrated) roster of columnists.
Dorfman's piece discusses Sears Holdings as the "most despised" stock among Wall Street analysts. (It's even more hated than my beloved GM). But wonders:
What about Sears, the most-hated stock? Granted, its stores
aren’t adventures in avant garde fashion retailing. But at $36 a
share, down from $114 in February, I think the stock has
recovery potential. And it’s inexpensive at 0.45 times book
value and 0.10 times revenue.
I don't own Sears. And with American Eagle Outfitters (AEO/NYSE) and Foot Locker (FL/NYSE) I have all the exposure to retail I can stomach. At least for now.
Or maybe Sears will be the next Montgomery Ward. Haven't dug enough into SHLD to state with any certainty but general comments about retailers are that book value includes inventory, which we all know is not a retailer's best friend. Also, the argument about real estate holding value is falling apart as Americans finally realize we've been overstored for years. Most of the Sears I know are not in the best locations. Add to that Reit's going BK and absence of credit availability, the RE value quickly disappears. So what's left is Craftsman and the other Sears brands, which are heavily dependent on housing and construction. Not a great place to be. With market leading retailers also being discarded, why gamble on something with so many headwinds.
Posted by: j | January 06, 2009 at 12:05 PM
@j: What you say certainly makes sense. Some, perhaps many, retailers may look good a few years from now when things recover. The question is which ones. Wish I had a crystal ball.
Posted by: CONTROLLED GREED.com | January 07, 2009 at 05:49 PM