RadioShack's Expansion Into China Offers Long-Term Upside

| About: RadioShack Corporation (RSH)

On Friday morning, RadioShack (NYSE:RSH) announced it would be increasing its international store count with a partnership in China. Beginning in July, RadioShack will open stores selling electronic products, accessories, and related services in China through a joint venture with Cybermart.

The new joint venture has Cybermart owning 51%, with RadioShack controlling the rest. To begin the joint venture, Cybermart put in $3.06 million, with RadioShack contributing $2.94 million. Despite the minority holding, RadioShack will see its name used for the new stores. The small stores will open in China, Hong Kong, Macau, and Taiwan. The first store under the joint venture will open in Shanghai, China.

Back in March, RadioShack signed a similar deal with Malaysian retailer Berjaya Retail Berhad to bring its stores into Malaysia. The deal will expand RadioShack into ten countries in ten years.

With both of these deals in place, RadioShack is on its way to 1,000 stores worldwide. The new deals double the number of RadioShack stores in international markets. After ten years, RadioShack stores will be in more than 39 countries. In the United States and Mexico, the company has over 4,700 stores and also runs a chain of mobile phone stores that sell phones from a number of telecommunications companies. RadioShack is also expanding the number of Target Mobile (NYSE:TGT) stores operated inside the large retailer.

Back in November, I had a hold rating on RadioShack shares in my Christmas shopping article. At that time shares were trading at $10.66. RadioShack shares are now under $5 and could be worth a long play at these levels. Shares are down significantly from a fifty two week high of $16.25. With its new expansion, RadioShack could become a nice acquisition target for an electronics retailer trying to expand in the Asian market. It is unlikely the company can keep their current yield of over 10%, but the shares could earn a nice return for a long term investor.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.