Opportunity in Volatility - Research Report on Staples and Office Depot

   Opportunity in Volatility - Research Report on Staples and Office Depot

The office supplies sector has not been performing well as of late, placing
considerable strain on some of the players in the space, while creating
opportunity in volatility for those who can survive the cut

PR Newswire

NEW YORK, January 23, 2013

NEW YORK, January 23, 2013 /PRNewswire/ --

The office supply industry has been hit by underachieving domestic sales and a
steep demand drop in international markets, specifically Europe. Segment
leader Staples, Inc.'s (NASDAQ:SPLS) [Full Research Report]^[1] stock price
has fallen 30 percent since peaking in early last year and close competitor
Office Depot (NYSE:ODP) [Full Research Report]^[^2^] is looking to maintain
relevance as margins press further.

Staples is trying to bounce back with two debt deals, the repurchasing of up
to $750 million of its only outstanding bond and new bond offerings with
proceeds going towards the original bond repurchase alongside other expenses.
These instruments will be replacing the company's existing debt of $119
million in short-term debt and $1.542 billion in long-term debt. According to
a Motley Fool report, the new debts will be incurring much less interest
payments, saving Staples as much as $73.125 million in annual interest
payments. Many analysts continue to support a "buy" rating, albeit in the
short-term, given how these measures could help Staples grow its net.

On the other hand, Office Depot may not be as fortunate as its segment leader.
It may have been bullish as of late, but increased competition and lackluster
sales could cause the company to considering merging with another competitor,
OfficeMax.

A Motley Fool report says Office Depot cannot compete with Staples in pricing
and in distribution, and while it is cutting costs and closing stores, it is
unlikely that the company can turn around. The company had previously posted
losses in the second quarter, and its sales are declining at a higher rate
than Staples'.

Financing from private equity firms won't be expected soon due to its
position, but a merger with OfficeMax is plausible. Either way, Staples will
still definitely be the top dog in the office supplies segment, especially
when the company is eating into the market share of its two closest
competitors.

Reference Links:

^[1] ^ The Full Research Report on Staples, Inc. - including full detailed
breakdown, analyst ratings and price targets - is available to download free
of charge at:
[http://www.nationaltradersassociation.org/r/entire_report/334f_SPLS]

^[^2^] ^ The Full Research Report on Office Depot - including full detailed
breakdown, analyst ratings and price targets - is available to download free
of charge at:
[http://www.nationaltradersassociation.org/r/entire_report/b04e_ODP]

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SOURCE National Traders Association
 
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