And finally, we come to RadioShack (NYSE:RSH). I do not see RadioShack surviving to see another Thanksgiving — at least not in its current form — and from the looks of things, neither does the market. The stock has lost 84% of its value in the past year and more than 90% since 2011.
If Best Buy’s business model is under threat, then how much worse off must RadioShack be? The company’s niche market of specialty electronic parts and components has been absolutely killed by Internet competition. And on those days you need a particular part or cable immediately and can’t afford to wait for shipping, you’re going to get a better selection at Fry’s Electronics or even Best Buy or Wal-Mart.
RadioShack has tried multiple times to reinvent itself by selling things such as mobile phones and service and mainstream consumer electronics. But by doing this, it’s competing head-to-head with big-box retailers and the mobile phone providers themselves. It’s hard to see how RadioShack can compete here, and frankly, the numbers speak for themselves. The company has had three consecutive losing quarters, and the losses have gotten bigger with each release.
RadioShack also is saddled with $750 million in debt — $375 million of which is due in 2013 — and a market cap of only $193 million.
Investors might get bailed out by an acquisition here. At the right price, Best Buy or some other electronics retailer might think it’s worth buying. But barring this, I expect RadioShack to bleed to death in the very near future.
Charles Lewis Sizemore, CFA, is the editor of the Sizemore Investment Letter, and the chief investment officer of investments firm Sizemore Capital Management. As of this writing, Sizemore Capital was long WMT and MSFT. Sign up for a FREE copy of his new special report: “Top 3 ETFs for Dividend-Hungry Investors.”