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Finding Value in Office Depot


With today's thudding drop it seems that ODP may become a decent value pick, at some point.

Hello from New York, where the leaves are falling at a slightly slower clip than the stock of Office Depot (ODP). The leaves do this every year. Office Depot is more prone to staying flat year after year. Recall that the chain had been a target for acquisition by Staples (SPLS), a merger which the FTC Rejected due to the threat of pricing power in office supplies.

A decade later, paper and office supplies remain a low margin business and ODP's stock has returned about 2% per year, annualized, in the 10 years since the merger fell through. With today's thudding drop it seems that ODP may become a decent value pick, at some point. Maybe even for a group like Staples. In other news:

  • The Gap (GPS) "discovered" sweat shop labor conditions at one of its vendors. The stock is slightly higher today; very encouraging price action for Gap bulls.

  • I took Mrs. Jeff Macke and the Macke Children to White Plains for a Sesame Street Production of "When Elmo Grows Up" yesterday. What I want to be when I grow up is someone who sells Mylar Elmo balloons for $10 a pop to the parents of frenzied 3-year-olds.

  • The research side of Prof. Adami's beloved Goldman Sachs (GS) upgrades Dell (DELL) to the vaunted "Conviction Buy List" and Dell immediately hits Adami's long-held $30 price target. Say what you will about what the consumer should be doing; after what we heard from Apple (AAPL), Microsoft (MSFT) and Intel (INTC) it's clear that someone, somewhere is buying a bunch of computers.

  • Is it going to be this quiet until the Fed Meeting?
Position in INTC

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