fcharlie

Don't Forget Sears' Housing Connection

I am not trying to write a ringing endorsement of Kmart. I agree with you. The store in my town will probably close. It's probably not popular with the landlord. Less and less people will shop there in the future, and the stores next door to Kmart probably wish they weren't next door to Kmart. All of this is probably true.

The disconnect is when people apply that thinking to the stock and assume it must be a terrible investment. It's not. Kmart generates hundreds of millions of free cash flow. It was used as a platform to acquire Sears which generates hundreds of millions of free cash flow as well. The whole company is priced like it's going to die. Hey, tobacco use has been declining for 40 years in this country, and cigarette companies keep churning out cash. Kmart and Sears will do the same, and when it's all said and done, Eddie and whomever is remaining owning the shares will be sitting on a huge pile of cash too.