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Nordstrom Shares, If Not Wares, Fairly Valued


In this economic environment, investors should consider discounters like Walmart, Target.

Asian stocks were a mixed bag overnight. The Hang Seng rose 1.21% while the Nikkei was off 0.47%. European stocks were trading higher, however. And here in the US, we're currently trading lower.

Nordstrom (JWN):
Give the retailer's fourth-quarter release a gander.

The chain posted a profit of $0.77, which was just shy of the $0.79 the Street had been looking for. Meanwhile, for the year, Nordstrom indicated it's looking to put $2.35 to $2.55 a share on the scoreboard. That's not terrible but it's not stellar either, considering analysts are looking for $2.41 a share.

My thoughts:

1. I like Nordstrom and even though the bottom line and the outlook weren't quite as powerful as perhaps some were expecting, they weren't awful either. And if it does manage to earn $2.35 to $2.55 a share, that would be a decent achievement in this environment, in my opinion.

2. But at $36 and change, my sense is that the shares are pretty fairly valued at this point. Sorry bulls. A pullback to the mid-$30s, however, might change my tune, as might some serious open-market buying by insiders in 2010. But I see no major trigger or catalyst to belly up here.

3. I'd feel much more comfortable cozying up to a discounter like Walmart (WMT) or Target (TGT) given the current environment rather than an upper-end chain such as Nordstrom.

For my last take on the company, click here.

RadioShack (RSH):
My dad must have been doing some shopping…

Check out the electronic chain's fourth-quarter numbers. It managed to put up a profit of $0.60, which was a shiny penny ahead of the estimate. On the downside, however, its shares were apparently off in after-hours action.

My take:

1. I see any weakness in the share price here as opportunity. While I continue to believe that Best Buy (BBY) will remain a top banana in this space, and Walmart's ability to move huge volumes of electronic merchandise is clearly a concern, I think Radio Shack has room to grow the bottom line and expand from here.

2. If it can manage to put $1.78 a share on the scoreboard for 2010 -- which is what the current estimate is for the year -- I think the shares could head to the mid- or upper-$20s, which wouldn't be all that bad.

For my take just yesterday on Radio Shack, click here.

Palm (PALM):
Justin Sharon points out this morning in his article that Stifel slapped a Hold on the California-based company.

My two cents:

1. I've been a bear for some time, and while I'm slightly more intrigued with the stock at $8 and change than I was when it was in the teens, I'm still not jumping up and down. The buckets of red ink it's expected to pour on shareholders this year is hardly an attractive feature. In short, I'll keep my eyes peeled because this could get exciting if the stock were to get down to the mid-single-digits. Heck -- down there it could be a takeover target.

2. Insiders, how about bellying up at these levels? That might send a good signal.

For my last take on Palm, click here.

Kraft (KFT):
Credit Suisse placed a $35 price target on the food giant.

I've been a huge fan of this company and the stock for some time now. I don't think it gets anywhere near the credit it deserves for its brands or its future earnings potential. And as far as stock price is concerned, I think the mid-$30s if definitely doable if it can prove to the Street how having Cadbury (CBY) under its already giant umbrella can help it and add materially to earnings.

Have a great day!
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No positions in stocks mentioned.

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