Important Updates for Investors
Carla Pasternak's Premiere Issue of High-Yield International Just
Released
Income expert Carla Pasternak's debut issue of High-Yield
International covers a Taiwanese manufacturer yielding 9.5%... a
rare Mexican monopoly yielding 13.4%... and other top-performing
investments yielding up to 19.0%.
Government's Biofuel Timetable Could Spell +15,900% Growth
+15,900% growth might seem far-fetched... but it's not. In fact, it
is mandated by law. And I've identified the ONLY stock positioned to
capture this growth.
The
Silver Lining to a Falling Dollar
Despite the U.S. national debt, there is a silver lining for income
investors. This massive spending, combined with movement out of U.S.
Treasuries, is going to take its toll on the dollar, and
international income investors could reap the rewards in the form of
higher dividends. |
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This Office Supply
Company has the Potential to Appreciate More than +100% |
Published:
May 26, 2008
Incorporated in 1986, Florida-based
Office Depot
(NYSE: ODP, $12.43)
has gained
considerable ground over the past two decades. In its first
five years of operation, the company spread throughout half the
country and opened over 200 stores. From there, it would expand
globally, adding locations in Eastern European countries such as
Poland and Hungary. Meanwhile, it was also busy making smart
acquisitions, like the merger with Viking Office Products -- a
top direct-mail marketer overseas. Today, Office Depot has
1,600
stores and markets its products to customers in 43 different
countries around the world.
Of
course, as the firm's geographic footprint has expanded, so
have its revenues -- over the past five years, sales have
climbed from $12.4 billion to $15.5 billion. Roughly
one-quarter of that total was generated in foreign markets,
and a similar amount came from direct sales to large
corporate clients arranged through the company's dedicated
sales force.
It's also worth noting that Office Depot's extensive
e-commerce operations (over 35 websites) brought in almost
$5 billion in sales last year, a total that has nearly
doubled over the past few years.
Right now, the firm is still in the midst of a turnaround. After
posting 16 consecutive quarters of declining same-store sales
several years ago, management decided to go on the offensive,
unveiling an ambitious remodeling and expansion plan. The firm
also opened dozens of new units, many of them in Staples own
backyard -- New England.
The company has made progress, but is still trailing in terms of
efficiency and has the lowest operating margins in the group.
However, that also means it has the most room to improve.
Already, management has shaved off over $600 million in needless
expenses during the past three years, and the new CEO is a
relentless cost-cutter.
In a recent presentation prepared for analysts, Office Depot
outlined a number of goals for the immediate future, including
plans to consolidate its European call centers and warehouses to
slash expenses. Overall, management has pinpointed concrete ways
to expand its EBIT margins by 300 basis points, which could lead
to significant bottom-line improvement. And consider that
virtually every penny of operating cash flow has been returned
to shareholders through stock repurchases over the past three
years.
Of course, along with those cost-cutting initiatives, the firm
is also rolling out new ideas aimed at stimulating top-line
growth as well, including new product offerings designed to
capture the business of small companies with less than ten
employees -- a huge potential market.
All things considered, Office Depot still has some work to do.
However, recent progress is encouraging, and business will pick
up even more once the housing-induced slowdown in California and
Florida (which account for a disproportionate 30% of the firm's
North American sales) begins to abate.
However, that being said, the company is a global heavyweight
with a large, entrenched customer base. I think this massive
sell-off has been overdone, and in time the shares should recoup
their losses and bounce back into the mid $20s, returning over
+100% for investors now, and that would still only equate to a
trailing P/E around 20, the stock's historical
5-year average.
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Nathan Slaughter
Editor
Half-Priced Stocks, The ETF Authority
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