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Staples Negative Sentiment Has Creating Buying Opporunity

|Includes:COST, Staples, Inc. (SPLS)
  • Ahead of Staples Earnings the shares were in decline we didn't see the shares as bargain yet. (seekingalpha.com/article/2038613-staples...) Since earnings the shares have plunged creating a buying opportunity for value investors
  • Yes - SPLS sales figures were absolutely miserable and they need to aggressively curtain brick and mortar stores.
  • Value - SPLS still has substantial cash flow and curtailing brick and mortar will reduce capital investments going forward leaving more free cash flow.
  • The online channel is valuable. SPLS generates more online sales than anyone but Amazon and given the product set likely has favorable user demographics. Management has yet to fully tap this channel for more than their traditional products - such as products for small business -- cloud services, 401ks etc. COST provides some great online options

Disclosure: I am long SPLS.

Stocks: SPLS, COST